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Brookfield Infrastructure Partners LP is revising its hostile bid for Inter Pipeline Ltd. one more time, increasing its total consideration after losing a legal battle tied to the takeover earlier this week.

Brookfield is now willing to pay $20 a share in cash to Inter Pipeline shareholders, up from $19.50 a share. Its original bid in February was worth $16.50 and comprised a mix of cash and shares.

Brookfield is also now allowing Inter Pipeline investors to take some shares at an elevated price instead of cash, offering one-quarter of a Brookfield Infrastructure Corp. (BIPC) share for each Inter Pipeline share. BIPC was created in 2020 to broaden the company’s investor base and attract investors who are limited in the types of securities they can own; its shares are effectively the same as the Brookfield Infrastructure Partners units.

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The share exchange was worth $23.85 for every Inter Pipeline share based on Wednesday’s closing price. But BIPC’s shares fell almost 5 per cent in early Thursday trading. Brookfield is also only willing to pay a maximum of 32 per cent of its total purchase price in shares.

Brookfield’s revised offer is its second in a month. In June, the company increased its offer price and allowed investors to take all cash. At the time, Brookfield said it would consider raising its takeover price if it won a court challenge. The company lost the challenge this week but still raised its bid.

Alberta’s securities watchdog delivered a significant blow to Brookfield’s dreams of acquiring Inter Pipeline on Monday by modifying the shareholder-voting requirements and shooting down Brookfield’s request to quash a termination fee.

The Alberta Securities Commission ruled in favour of Inter Pipeline and its friendly takeover partner, Pembina Pipeline Corp. , by raising the percentage of shares that must be tendered to Brookfield’s hostile takeover bid. Before the ruling, Brookfield needed the support of a simple majority of Inter Pipeline’s independent shareholders, but it will now need the support of 55 per cent under a modified tender condition.

The ASC also dismissed Brookfield’s request to remove a $350-million termination fee that Inter Pipeline has agreed to pay Pembina if their friendly takeover isn’t approved by shareholders. “We were not satisfied that Inter Pipeline engaged in any improper defensive tactics,” the regulator said in an oral ruling.

The ASC’s ruling followed Brookfield’s request for the regulator to rule against the termination fee, because if Brookfield’s hostile bid is successful, the infrastructure giant would effectively be on the hook for it. Brookfield pledged to boost its takeover price, which was then worth $8.47-billion – originally slightly higher than Pembina’s $8.3-billion offer – if the fee was scrapped.

To counter, Inter Pipeline filed an argument with the ASC that was backed by Pembina, alleging Brookfield was using “coercive tactics” to win the takeover battle. The two companies zeroed in on Brookfield’s use of securities known as total return swaps, which give Brookfield a 9.9-per-cent economic interest in Inter Pipeline – but do not provide Brookfield with voting control of that block of shares. These are in addition to Brookfield’s outright ownership of a 9.75-per-cent stake in Inter Pipeline’s common shares.

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Brookfield has been touting its 9.9-per-cent economic interest through the swaps, and Pembina and Inter Pipeline worried Brookfield scared off rival bidders and convinced some shareholders that its hostile bid was tough to stop because the perceived voting block is so large.

The ASC agreed. “We find that Brookfield’s use and disclosure relating to the total return swaps was clearly abusive to the Inter Pipeline shareholders and the capital markets and, as such, contrary to the public interest,” the regulator said in its oral ruling, adding that the limited disclosure “adversely affected Inter Pipeline’s shareholders and the Inter Pipeline auction process.” A detailed written ruling will be released in the near future.

Because the use of swaps in a takeover battle is a relatively novel issue, the ASC said its powers were constrained to a few options, one of which was to shoot down Brookfield’s bid altogether. Instead, the regulator increased the minimum tender condition to 55 per cent.

The ASC also demanded more disclosure, asking Brookfield to publish the names of its counterparties and the dates of the swap transactions. Brookfield was also to disclose more information about a $15-million success fee it agreed to pay Bank of Montreal, which served as both its financial adviser and a swap counterparty. The required details were made public in a news releases outlining the latest revised offer.

Because of the revised bid, Brookfield’s shareholder vote has been extended to Aug. 6.

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