Smart acquisition strategies cut their risk

Article Excerpt

Growth by acquisition can be risky, as newly purchased companies may develop unforeseen problems, especially in an unsettled economy. But Pembina lowered that risk with last year’s purchase of a rival in a business where it’s already a leader. Meanwhile, Veresen aims to add power plants with long-term contracts already in place. PEMBINA PIPELINE $32.36 (Toronto symbol PPL; Shares outstanding: 310.3 million; Market cap: $10.1 billion; TSINetwork Rating: Average; Div. yield: 5.2%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil output, 30% of Western Canada’s natural gas liquids (NGLs) and almost all of B.C.’s conventional oil production. In the quarter ended June 30, 2013, Pembina’s revenue rose 34.9%, to $1.2 billion from $870.9 million a year earlier. In April 2012, the company paid $3.2 billion for rival Provident Energy, which extracts, transports and stores NGLs. Provident was the main reason for the higher revenue. Cash flow rose 60.9%, to $144.0 million from $89.5 million. Cash flow per share…