After the close Keyera (KEY) announced a splashy $5.2B acquisition of Plains All American Pipeline’s Canadian NGL business at 7.8× 2025 EBITDA - 6.8x after expected year one synergies, well below where it trades today.

Given the proximity of Plains’ assets to Keyera’s existing footprint, the company expects to drive $100M of cost savings and operational enhancements, driving near-term cash flow accretion in the mid-teens.

Longer term, the company expects to unlock additional benefits - as a favourable outlook for natural gas production in Alberta bodes well for infrastructure names that benefit from higher volumes.

The deal is funded by a $1.8B bought deal equity financing, with the balance landing on a new credit facility - a structure that should keep leverage in-line with the company’s 2.5-3.0x leverage target, given the expected ~50% EBITDA pick-up.

All-in, the deal looks solid and comes at the right time, with Canada turning its focus on energy independence. With natural gas well-positioned for the continued data center buildout, KEY’s new assets could have a much higher price tag in the future.

About Bullpen: Bullpen Finance Inc. publishes content on Canadian markets and provides paid research coverage of select Canadian issuers. Bullpen is paid in cash by covered issuers, does not accept stock or options, does not hold positions in covered securities, and does not conduct investment banking business. Bullpen and LodeRock Advisors Inc. are affiliated; LodeRock provides investor relations services to issuers, some of whom are covered by Bullpen Research. When a post discusses a covered issuer, a specific disclosure appears at the top of the post. This post is published for general information purposes. It is not personalized investment advice and is not tailored to any individual reader’s circumstances. Bullpen is not a registered investment adviser or dealer. For full disclosures, including analyst certification, jurisdictional statements, and conflict of interest policies, please see our Legal & Disclosures section on our website.

You might be interested in…