Plains All American Pipeline (PAA 4.00%) stock was the pipeline to increased gains for investors on Wednesday. They traded the shares up by nearly 4% on news of an important divestment, and that rate easily beat the essentially flat-lining S&P 500 index.
Selling the Canadian NGL business
After market close on Tuesday, Plains and its majority owner, Plains GP Holdings (PAGP 4.22%), disclosed that they had finalized agreements to sell "substantially all" of their natural gas liquids (NGL) business.
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The acquirer is a Canadian peer company, Keyera, and the deal is to be effected in cash. The price is roughly 5.15 billion Canadian dollars ($3.79 billion). The sale is expected to close in the first quarter of 2026, subject to the applicable regulatory approvals and closing conditions.
Plains added that, accounting for a potential one-time "special distribution" estimated at $0.35 per unit to both Plains common unit holders and Plains GP shareholders, it will reap total proceeds of around $3 billion from the divestment. The special distribution payment is subject to approval by Plains's board of directors.
Following the sale, Keyera will own Plains' Canadian NGL assets, but Plains will retain those in its native U.S. The latter company's crude oil assets in Canada are not part of the deal.
A win-win, says the seller
In its press release on the deal, Plains quoted CEO Willie Chiang as saying that it's "a win-win transaction for both Plains and Keyera. Plains is exiting the Canadian NGL business at an attractive valuation while Keyera is receiving highly complementary and critical infrastructure in a strategic market."
Judging by their collective reaction, Plains investors agree with this assessment. It will provide the company with gobs of capital while slimming its operational structure and allowing it to concentrate more on the crude oil segment.
