Tidewater Midstream and Infrastructure Ltd. (TWM-T) will acquire the remaining 35 per cent stake in its renewable fuels subsidiary, Tidewater Renewables, in a $261-million deal aimed at simplifying operations and strengthening growth opportunities.

Under the agreement announced Monday, minority shareholders of Tidewater Renewables will receive 0.88 common shares of Tidewater Midstream for each share they own. Tidewater Midstream owns approximately 65 per cent of the outstanding shares of Tidewater Renewables.

The consideration implies a value of $20.58 per share of Tidewater Renewables on the TSX as of Oct. 30, and total consideration to shareholders of Tidewater Renewables (other than Midstream) of approximately $261 million.

The combined company is to operate as Tidewater Midstream and remain listed on the TSX under the symbol TWM.

Tidewater Midstream “will be in the strongest position in the two companies' history to reduce debt and advance to the next phase of growth” in its current state, Jeremy Baines, president and CEO of the company, said in the release.

Transaction aims for enhanced synergy

Tidewater Midstream is an energy infrastructure company that operates in the North American gas processing, natural gas liquids, petroleum refining and renewable fuels markets.

It formed Tidewater Renewables to build the Renewable Diesel and Renewable Hydrogen Complex (the HDRD Complex), Baines said. Located in Prince George, B.C., the complex entered service in 2023 and converts feedstocks such as used cooking oil, canola oil and tallow into 3,000 barrels of renewable diesel per day. It also includes a renewable hydrogen plant that can output 23.7 tonnes of the fuel per day.

The fuels produced from the HDRD Complex are designed to replace fossil fuels as a lower-carbon alternative. Tidewater Renewables says its renewable diesel has a carbon intensity 80 to 90 per cent lower than conventional diesel. There are also plans to co-locate a sustainable aviation fuel facility on the site.

Adjacent to the complex is the Prince George Refinery, where light oil is processed. Tidewater Midstream and Renewables, Baines noted, have operated the two facilities as one integrated site with shared infrastructure, feedstock logistics, management and customer base.

Bringing the two companies under a single corporate structure is expected to generate operational efficiencies and strengthen their ability to execute a growth strategy. The heightened scale plus larger combined market capitalization is anticipated to improve access to capital markets.

“Together with a simplified structure and streamlined messaging, the combined company is expected to be better positioned to attract institutional investors,” Tidewater Midstream said, “and to have enhanced alternatives for any future financing requirements.”

Acquisition expected to close in December

For the proposed transaction, Tidewater Midstream expects to issue 11.1 million shares of the company, or approximately 33 per cent of the total amount of outstanding shares.

The boards of directors of both companies have unanimously recommended that shareholders vote in favour of the transaction.

Other than shareholder approval, the transaction requires the approval of the Court of King's Bench of Alberta, the conditional approval of the TSX and other customary closing conditions.

Shareholder meetings for both companies are expected to be held on Dec. 14. The transaction is expected to close on or about Dec. 18 if all approvals are granted and conditions are met.

Upon closing of the transaction, Baines is to remain CEO while Ian Quartly will serve as CFO of the combined company.