Latest News
Kinder Morgan to consolidate KMP, KMR, EPB in USD70bn deal
Monday 11 August 2014

11 August 2014 – US energy company Kinder Morgan Inc (NYSE:KMI) said it would buy the outstanding shares it did not already own in Kinder Morgan Energy Partners LP (NYSE:KMP), Kinder Morgan Management LLC (NYSE: KMR) and El Paso Pipeline Partners LP (NYSE: EPB) in a deal with a total transaction value of USD70bn (EUR52.2bn).

The move will create a business with an enterprise value of some USD140bn that will be the largest infrastructure company in North America and the third biggest energy company overall, Kinder Morgan said.

Under the terms of the deal, KMP unit holders will get 2.1931 Kinder Morgan shares and USD10.77 in cash for each unit they hold in the pipeline transportation and energy storage company, or USD89.98 apiece. Kinder Morgan will also exchange 2.4849 own shares for each KMR outstanding share, resulting in a price of USD89.75 apiece for its limited partner. EBP unit holders, at the same time, will receive 0.9451 Kinder Morgan shares and USD4.65 in cash for each unit they own in the gas transportation and terminaling facilities operator, or USD38.79 per unit.

KMP and EBP unit holders will be given the right to choose cash or Kinder Morgan shares for their interests, subject to proration. The company has already secured committed financing from Barclays Plc (LON:BARC) for the cash part of the transaction.

The combination is seen to close by the end of the year, pending clearance by unit holders and shareholders and customary regulatory approvals. Each of the three transactions is conditioned upon the closing of the other transactions, Kinder Morgan added, noting that the boards of all the three companies have agreed to recommend the deal to their respective unit holders and shareholders.

The deal is intended to simplify Kinder Morgan's structure, with all companies benefiting from this consolidation, chairman and CEO Richard Kinder commented. In addition to getting a dividend of USD2.00 next year, or 16% more than in 2014, the deal will also ensure substantial tax benefits from depreciation deductions related to the upfront purchase and future capital expenditures, he said.

Kinder Morgan obtained financial advice from Barclays and Citigroup Inc (NYSE:C), while Weil Gotshal & Manges LLP and Bracewell & Giuliani LLP served as legal advisors. Jefferies Group LLC (NYSE:JEF) and Baker Botts LLP counselled KMP and KMR and EPB was advised by Tudor, Pickering, Holt & Co and Vinson & Elkins LLP.
Date Published: 11/08/2014
Target: Kinder Morgan Management LLC, Kinder Morgan Energy Partners LP, El Paso Pipeline Partners LP
Country: USA
Deal Size: 70bn (USD)
Sector: Petroleum/Natural Gas/Coal
Type: Corporate acquisition
Financing: Cash & Stock, Debt
Status: Agreed
Buyer: Kinder Morgan Inc
Buyer Advisor: Weil, Gotshal & Manges LLP, Citigroup Inc, Barclays Plc, Bracewell & Giuliani LLP