Brookfield to Buy Colonial Pipeline

Brookfield Infrastructure Partners has struck a deal to acquire Colonial Pipeline for about $9 billion including debt. The buyer expects the deal to be finalized in the second half of the year.

Brookfield’s equity investment in the company will be $500 million, representing 15% of the total equity investment in the deal, the finance company also said. Part of the deal involves Shell’s stake in Colonial Pipeline, which amounts to a little over 16%. Shell said it would sell that stake for $1.45 billion.

“This divestment reflects our focus on performance, discipline and simplification,” Andrew Smith, President of Shell Trading & Supply, said in a news release about the deal. “It will allow us to concentrate on areas where we have scale and competitive advantage.”

Besides Shell, the owners of Colonial Pipeline include KKR, Koch Capital Investments Company, IFM Investors, and Canada’s Caisse de dépôt et placement du Québec.

Colonial Pipeline is the largest oil product transportation infrastructure asset in the United States, featuring a network spanning 5,500 miles. The network transports some 100 million gallons of jet fuel, diesel, gasoline, and heating oil on a daily basis. In 2021, cybercriminals hacked the pipeline, disrupting the flow of fuels which led to shortages in some parts of the country. The company had to pay a ransom of $5 million, highlighting cybersecurity issues around critical energy infrastructure.

Reports about a potential sale first emerged last year when Reuters reported that the company’s owners were exploring such a move. The report cited unnamed sources as saying some of the owners were considering a sale of their stakes, with the company’s total valuation seen at over $10 billion. The first to consider a sale was the Canadian institutional investor. The valuation of Colonial remained above $10 billion in later reports as well, with Brookfield emerging as a frontrunner in March.

By Irina Slav for Oilprice.com

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