Brookfield Infrastructure Partners, alongside its institutional partners, has reached an agreement to acquire Colonial Enterprises, the operator of the largest fuel pipeline network in the US, in a transaction valued at $9bn, according to a report by Bloomberg.
As part of the deal, Colonial’s five shareholders will divest their entire stakes to Brookfield, with Shell’s subsidiary set to transfer its 16.125% interest for $1.45bn, according to a statement released on Friday.
The acquisition comes at a time when President Donald Trump is focusing on expanding domestic energy infrastructure.
However, the expansion of new oil and natural gas pipelines in the US is hampered by substantial regulatory hurdles, thereby making existing pipeline assets increasingly valuable. In March, Bloomberg News reported that Brookfield was emerging as the front-runner to acquire Colonial.
The Colonial Pipeline, stretching 5,500 miles (8,850 kilometres) from Texas to New Jersey, serves as the primary source of gasoline, diesel, and jet fuel for the US East Coast. The pipeline was forced to shut down for five days in 2021 following a cyberattack, leading to widespread fuel shortages.
Shell’s Midstream Operating unit will divest its stake to Brookfield’s Colossus AcquireCo unit. The remaining shares of Colonial are owned by Koch (28.1%), KKR (23.4%), Canadian pension fund Caisse de Depot et Placement du Quebec (16.5%), and IFM Investors Pty (15.8%).
The transaction is expected to close in Q4. Debt financing for the deal was arranged by Morgan Stanley and Mizuho Bank. Brookfield’s financial advisors were Jefferies, Greenhill & Co, and Morgan Stanley, while Kirkland & Ellis served as the legal advisor.
Brookfield’s global pipeline investments include a controlling stake in Brazil’s NTS pipeline, which spans more than 2,000 kilometers, and a 2020 participation in a consortium that acquired a $10.1bn stake in Abu Dhabi’s natural gas pipelines.
