-- (Adds Keyera comment on expected closes of the acquisition in paragraph 5; updates shares.)
Keyera (KEY.TO) faces official pushback on its $5.15-billion acquisition of Plains All American Pipeline's (PAA) Canadian natural gas liquids assets as the Competition Bureau on Tuesday said it filed an application with the Competition Tribunal challenging the deal.
The bureau said in a release it believes "the proposed transaction is likely to harm competition in natural gas liquids processing and storage, particularly at Fort Saskatchewan, Alberta, Canada's primary hub for these services".
The bureau said the referral to the Tribunal follows on an investigation that concluded the acquisition would eliminate a close competitor in the Fort Saskatchewan market and increase market concentration. It also said the merged company would have the "ability to increase prices, impose less favourable contract terms, reduce incentives to expand capacity, and further entrench control over critical infrastructure".
When it first announced the acquisition in July of last year, Keyera said the purchase would add natural-gas liquids fractionation and processing facilities, as well as 23-million barrel of oil storage, 1,500 miles of pipelines and terminal infrastructure in Western Canada and Ontario.
In a statement, Keyera said it received a filing from the Competition Bureau shortly before markets opened on Tuesday It said the bureau's challenge does not prevent it from closing the acquisition. It expect to complete the purchase this month..
"The Company disagrees with the Commissioner's assertions and characterization of the Transaction, and intends to respond to the application. As the Company has previously advised, the Transaction will strengthen competition across the basin and provide customers with improved access to key markets and greater flexibility in how their products are handled, transported and sold," it said.
Keyera shares closed down $3.86 to $49.11 on the Toronto Stock Exchange.