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Brookfield to Buy Colonial Pipeline Owner in $9 Billion Deal
Brookfield Infrastructure Partners LP and its affiliates are set to purchase Colonial Enterprises Inc., the operator of the largest fuel pipeline in the U.S., for a valuation of $9 billion. The transaction will see Colonial’s five owners, including a unit of Shell plc, completely divesting their stakes, with Shell selling its 16.125% interest for $1.45 billion. This move comes amid attempts by the U.S. government to enhance domestic energy infrastructure, particularly as constructing new oil and gas pipelines faces extensive regulatory challenges, thus increasing the value of existing assets like Colonial.
The Colonial Pipeline, which stretches 5,500 miles from Texas to New Jersey, is a critical supply line for gasoline, diesel, and jet fuel on the East Coast. It was notably offline for five days due to a cyberattack in 2021, which resulted in significant fuel shortages. The ownership breakdown before the acquisition indicates substantial stakes held by major players like Koch Inc., KKR & Co., Caisse de Depot et Placement du Quebec, and IFM Investors Pty.
The acquisition is anticipated to close in the fourth quarter, with Morgan Stanley and Mizuho Bank leading the debt financing. Brookfield has significant experience in the pipeline sector, having invested in other global pipeline assets, reflective of their strategic focus on critical energy infrastructure.
Expert opinion in the transportation field highlights that this acquisition underscores a trend where existing transportation infrastructure is becoming increasingly valuable as new developments face regulatory hurdles. The Colonial Pipeline's strategic significance for energy distribution makes it an attractive asset, especially in light of recent cybersecurity incidents. Such investments are crucial for ensuring the resilience and stability of energy supply chains, particularly as nations place greater emphasis on energy independence and security.
The Colonial Pipeline, which stretches 5,500 miles from Texas to New Jersey, is a critical supply line for gasoline, diesel, and jet fuel on the East Coast. It was notably offline for five days due to a cyberattack in 2021, which resulted in significant fuel shortages. The ownership breakdown before the acquisition indicates substantial stakes held by major players like Koch Inc., KKR & Co., Caisse de Depot et Placement du Quebec, and IFM Investors Pty.
The acquisition is anticipated to close in the fourth quarter, with Morgan Stanley and Mizuho Bank leading the debt financing. Brookfield has significant experience in the pipeline sector, having invested in other global pipeline assets, reflective of their strategic focus on critical energy infrastructure.
Expert opinion in the transportation field highlights that this acquisition underscores a trend where existing transportation infrastructure is becoming increasingly valuable as new developments face regulatory hurdles. The Colonial Pipeline's strategic significance for energy distribution makes it an attractive asset, especially in light of recent cybersecurity incidents. Such investments are crucial for ensuring the resilience and stability of energy supply chains, particularly as nations place greater emphasis on energy independence and security.