The U.S.-listed shares of Pembina Pipeline Corp.
PBA,
-0.34%
dropped 2.7% in premarket trading Tuesday, after the Canada-based pipeline services company announced an agreement to buy Inter Pipeline Ltd.
IPL,
-0.74%
IPPLF,
-0.48%
in deal that values Inter at C$8.3 billion ($6.9 billion). Under terms of the deal, Inter shareholders will receive 0.5 Pembina shares for each Inter share they own, which based on Monday's closing prices values Inter shares at $19.45 each, a 6.3% premium. The company expects cost synergies of C$150 million to C$200 million a year, while the combined company is expected to generate C$1.1 billion to C$1.4 billion in adjusted cash flow. Pembina's U.S.-listed shares have run up 36.6% year to date, while the S&P 500
SPX,
+0.08%
has gained 11.9%.