Advisory firm urges shareholders to support Brookfield's bid for Inter Pipeline

Prominent shareholder advisory firm ISS is recommending Inter Pipeline investors reject the company's proposed sale to Pembina Pipeline Corp. ISS instead says investors should support a hostile takeover bid by Brookfield Infrastructure LLP.

Brookfield raised its offer for Calgary-based Inter Pipeline last week. The Toronto-based company is now offering $20 in cash or 0.25 of a Brookfield Infrastructure share for each Inter Pipeline share. The deal is valued at $16 billion, including debt.

Toronto-based Brookfield Infrastructure is Inter Pipeline's largest shareholder with a 9.75 per cent stake. It launched its bid for Inter Pipeline in February.

Inter Pipeline has resisted the bid, instead signing a friendly all-stock deal to be bought by Pembina Pipeline Corp. That deal would see shareholders receive half a Pembina share for each Inter Pipeline share they hold.

ISS says the all-stock deal proposed by Pembina presents opportunity for shareholders, but Brookfield's all-cash option comes with greater financing certainty and less regulatory risk.

Brookfield has extended its offer for Inter Pipeline to Aug. 6. Shareholders will vote on the proposed Pembina transaction on Thursday, July 29.