Pembina buys Veresen

Article Excerpt

PEMBINA PIPELINE $43.25 (Toronto symbol PPL; s/o: 399.0 million; Market cap: $17.2 billion; TSINetwork Rating: Average; Divd. yield: 4.7%; www.pembina. com) will now buy VERESEN $18.45 (Toronto symbol VSN; Shares outstanding: 313.6 million; Market cap: $5.8 billion; TSINetwork Rating: Average; Dividend yield: 5.4%; www.vereseninc.com). Veresen jumped 21% on the offer. Including Veresen’s debt, the takeover is worth $9.7 billion. Pembina has offered Veresen investors $18.65 a share. Specifically, under the deal, they can choose either $18.65 in cash or 0.4287 shares of Pembina for each Veresen share they hold. However, Pembina has capped the total amount of cash and shares it will pay. As a result, most Veresen shareholders will get $4.8494 in cash and 0.3172 of a Pembina share. Investors will only pay capital gains tax on those shares when they sell them. After the transaction is completed, Pembina intends to raise its monthly dividend by 5.9%, to $0.18 from $0.17. The stock currently yields a high 4.0%. We recommend that investors select the…