KINDER TO BUY EL PASO FOR $21.1B CREATING U.S. PIPELINE LEADER - Mike Lee - Bloomberg.com
Kinder Morgan Inc. agreed to buy El Paso Corp. (EP) for about $21.1 billion in cash and stock, creating the largest U.S. natural-gas pipeline network in the energy industry’s biggest transaction in more than a year.
The offer is valued at $26.87 per El Paso share, or 37 percent more than their Oct. 14 closing price, Houston-based Kinder Morgan said in a statement today. The offer is comprised of $14.65 in cash, 0.4187 shares of Kinder Morgan, and 0.64 Kinder Morgan warrants, the statement said.
The takeover is the largest ever proposed of a pipeline company, surpassing the 2007 leveraged buyout of Kinder Morgan itself by a group including Richard Kinder and Goldman Sachs Group Inc. The combined company would have 67,000 miles (107,000 kilometers) of gas lines and eclipse Enterprise Products Partners LP as the biggest U.S. pipeline operator.
“This once in a lifetime transaction is a win-win opportunity for both companies,” Kinder, who will be chairman and chief executive officer of the combined company, said in the statement. He said the deal, once closed, would create immediate shareholder value because of its cash flow.
The total value including assumed debt from El Paso is $37.8 billion, Kinder Morgan said in a document prepared for investors. The acquisition is the ninth-largest ever proposed in the energy industry and the biggest in more than a year, according to data compiled by Bloomberg.
Kinder Morgan intends to sell the exploration and production assets of El Paso, the statement said. El Paso had announced in May that it would spin off the unit to its shareholders. The combination will save about $350 million a year, the statement said.
2012 Closing
Kinder Morgan and Houston-based El Paso said they expect the transaction to close in the second quarter of 2012, creating the fourth-largest energy company in North America. Enterprise Products has about 50,000 miles of pipeline.
Evercore Partners Inc. and Barclays Capital Plc served as financial advisers for Kinder Morgan; Weil Gotshal & Manges LLP and Bracewell & Giuliani LLP acted as legal advisers.
Morgan Stanley acted as financial adviser for El Paso; Goldman Sachs Group Inc. was advising El Paso on its previous spinoff. Wachtell, Lipton, Rosen & Katz was El Paso’s legal adviser.
To contact the reporter on this story: Mike Lee in Dallas at mlee326@bloomberg.net
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net
Views: 471
Replies to This Discussion
-
Permalink Reply by Skip Peel - Mineral Consultant on
-
With over 1150 wells in LA. and plentiful proven, undeveloped well locations, El Paso should be an attractive acquisition for a number of mid-major and major E&Ps with limited exposure to the HA/BO trend and the financial ability to capitalize the purchase. It will be interesting to see the level of interest and whether there is any significant competition. Regardless of current market conditions, this will be a good test of the industry's long term valuation of the HA/BO basin potential.
-
Permalink Reply by dbob on
-
Skip
While I don't doubt the logic, i think with Kinder buying El Paso there is a good chance that Kinder will split E&P assets, as required, to get good value, rather than making a single large sale. That said, if it can be sold as a unit at a good price, there will be a buyer.
-
Permalink Reply by Skip Peel - Mineral Consultant on
-
I'm not suggesting that one buyer will acquire all of El Paso's E&P assets. They are scattered across over a dozen plays in as many states. However their Haynesville/Bossier assets are considerable and should be attractive to a larger E&P looking for an entree into the Play long term. Their Wilcox assets are included in the total LA. well count but are small in comparison to their Haynesville position. Kinder Morgan has already committed to divest all of the El Paso E&P assets. The diversity of the leasehold makes in unlikely that there would be a single buyer.
-
Permalink Reply by Skip Peel - Mineral Consultant on
-
Sorry, Henry.
Excerpt from follow up Bloomberg article:
Apache Corp. (APA), Hess Corp. (HES) and Occidental Petroleum Corp. (OXY) may have an interest in El Paso’s assets because those companies are seeking additional opportunities in shale fields, Brian Youngberg, an analyst at Edward Jones in St. Louis, said in an interview today.
The author also speculates that foreign national energy companies may be interested in picking up the El Paso E&P assets with equal emphasis on leasehold and technical operational expertise.
Full article: http://www.bloomberg.com/news/2011-10-17/kinder-morgan-s-el-paso-ac...
Support GoHaynesvilleShale.com
Top Content
Blog Posts
The Lithium Connection to Shale Drilling
Shale drilling and lithium extraction are seemingly distinct activities, but there is a growing connection between the two as the world moves towards cleaner energy solutions. While shale drilling primarily targets…
ContinuePosted by Keith Mauck (Site Publisher) on November 20, 2024 at 12:40
Not a member? Get our email.
Groups
-
San Augustine, TX
386 members
-
Miller County, Arkansas
27 members
-
Sabine Parish, LA
455 members
-
South Caddo Parish Group
440 members
-
Natchitoches Parish
400 members
-
Bienville Parish, LA
244 members
-
Fayetteville Shale
149 members
-
North Caddo Parish
358 members
-
Central Texas Gas
63 members
-
Cass County, TX
119 members
© 2024 Created by Keith Mauck (Site Publisher).
Powered by
