(Reuters) - Pembina Pipeline Corp (TO:PPL) said it would buy Veresen Inc (TO:VSN) in a deal valued at C$9.7 billion (£5.5 billion), including debt, adding natural gas pipelines and processing infrastructure to its oil and natural gas liquids-heavy portfolio.
The combined company will have a strong position in the Western Canadian Sedimentary Basin, home to the world's third largest crude reserves.
After the deal with Veresen, Pembina will own about 5.8 billion cubic feet per day of gas processing infrastructure across the region by 2018.
Pembina said Veresen shareholders could opt to get either 0.4287 of a Pembina share or C$18.65 in cash.
That is a 22.5 percent premium to Pembina's last close, the companies said.
Pembina said it would pay as much as about C$1.52 billion in cash and 99.5 million of its stock.
Pembina also said it would increase its dividend by 5.9 percent upon close of the deal - expected late in the third quarter or early in the fourth quarter.
CIBC World Markets Inc is Pembina's financial adviser. Blake, Cassels & Graydon LLP and Bracewell LLP are its legal advisers.
Scotiabank is advising Veresen, while Osler, Hoskin & Harcourt LLP is providing legal counsel.