Inter Pipeline argued that Brookfield’s use of return swaps with its counterparty, Bank of Montreal, could be used to block shareholder approval of its deal with Pembina. The regulator sided with Inter Pipeline, which had alleged that Brookfield failed to properly disclose details around a total return swap it says gave Brookfield a 9.9 per cent economic interest in its company in addition to the 9.75 per cent stake it already owned. On Monday, the Alberta Securities Commission ruled that Brookfield has used “abusive” tactics in its efforts thus far to acquire Inter Pipeline.
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“A formal recommendation by the board will be made to shareholders in due course,” it said in a statement. Inter Pipeline acknowledged a Brookfield announcement that it plans to further revise its offer but advised its shareholders that it has not received a formal revised offer and that there is no need for them to take any action at this time. Inter Pipeline has resisted the bid, instead signing a friendly all-stock deal to be bought by Pembina Pipeline Corp., that would see shareholders receive half a Pembina share for each Inter Pipeline share they hold. Toronto-based Brookfield Infrastructure, which is Inter Pipeline’s largest shareholder with a 9.75 per cent stake, launched its bid for Inter Pipeline in February. The proposal is up from its earlier bid of $19.50 in cash or 0.225 of a Brookfield Infrastructure share.