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(Bloomberg) — Keyera Corp. agreed to buy Plains All American Pipeline LP’s Canadian natural gas liquids business and some US assets for C$5.15 billion ($3.77 billion) in cash, significantly bulking up its pipeline system around the country.
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The assets include more than 1,500 miles of pipeline infrastructure with capacity of over 575,000 barrels a day, the Calgary-based gas and NGL midstream company said in a statement. Keyera expects to generate C$100 million in savings from the acquisition and boost distributable cash flow by a mid-teens percentage in the first year.
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The deal — Keyera’s largest ever — will raise the company’s enterprise value as much as 46% to C$19 billion when it closes in the first quarter of next year, Chief Executive Officer Curtis Setoguchi said in a phone interview.
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Foreign companies have been exiting the Canadian energy industry or reducing their exposure by selling assets to local companies. The deal gives Keyera operations in both eastern and western Canada, including processing capacity, storage infrastructure and truck and rail terminals. Income that had been going to the US will now stay in Canada, Setoguchi said.
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“Not only will it be under Canadian management — Canadian decision makers’ hands — we will deploy that money in Canada now,” he said.
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The transaction has been in negotiations for six months, but Keyera has been interested in the Plains assets for the past decade, he said. Keyera was able to strike the deal after paying down about C$500 million of debt, Setoguchi said.
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For Plains, the deal helps make it more of a pure-play crude oil midstream play, and the company plans to use the proceeds for bolt-on acquisitions and buying back preferred and common shares.
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(Updates with CEO’s comments starting in third paragraph)
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