Q: Do you think South Bow is potential takeover target? Their pipeline would seem to be a desirable asset for another pipeline company, Private Equity or Infrastructure name like Brookfield Infrastructure. Would their higher debt be a deterrent at this point? South Bow reminds me somewhat of Inter Pipeline but perhaps more desirable since their pipeline extends from Canada into the USA. Looking forward to your response. Many thanks.
5i Research Answer:
We do think it would be attractive to some larger companies. Debt is high, but a total deal value would be around $20B (more with a premium). High, but certainly doable. The US extension is both positive and negative. It may be a negative until all the tariff mess is sorted out. So, a take-out is not something we would expect in the mid-term, but we do think SOBO would be attractive for a long term buyer, either a financial buyer or industry player.