Energy Transfer LP and Enable Midstream Partners LP have entered into a definitive merger agreement, according to a Feb. 17 statement. According to the agreement, Energy Transfer will acquire Enable in an all-equity transaction valued at approximately $7.2 billion.
Under the terms of the agreement, Enable common unitholders will receive 0.8595 Energy Transfer common units for each Enable common unit, an exchange ratio that represents an at-the-market transaction, based on the 10-day volume-weighted average price of Energy Transfer and Enable common units on Feb. 12. In addition, each outstanding Enable Series A preferred unit will be exchanged for 0.0265 Series G preferred units of Energy Transfer. The transaction will include a $10 million cash payment for Enable’s general partner.
Energy Transfer’s acquisition of Enable will increase the company’s footprint across multiple regions and provide increased connectivity for Energy Transfer’s natural gas and natural gas liquid (NGL) transportation businesses.
Energy Transfer will significantly strengthen its NGL infrastructure by adding natural gas gathering and processing assets in the Anadarko Basin in Oklahoma and integrate high-quality assets with the company’s existing NGL transportation and fractionation assets on the U.S. Gulf Coast. The acquisition will also provide significant gas gathering and processing assets in the Arkoma basin across Oklahoma and Arkansas, as well as the Haynesville Shale in East Texas and North Louisiana.
Enable’s transportation and storage assets enhance Energy Transfer’s access to core markets with consistent sources of demand and bolster its portfolio of customers anchored by large, investment-grade customers with firm, long-term contracts. Energy Transfer will further enhance its connectivity to the global LNG market and the growing global demand for natural gas as the world transitions to cleaner power and fuel sources.
The combination of Energy Transfer’s significant infrastructure with Enable’s complementary assets will allow the combined company to pursue additional commercial opportunities and achieve cost savings while enhancing Energy Transfer’s ability to serve customers.
Energy Transfer expects the combined company to generate more than $100 million of annual run-rate cost and efficiency synergies, excluding potential financial and commercial synergies. Potential commercial synergies include significant incremental earnings, which may result from integrating Enable’s Anadarko gathering and processing complex with Energy Transfer’s fractionation assets on the Gulf Coast.
The transaction has been approved by the Energy Transfer board of directors, as well as the Conflicts Committee and the board of directors of Enable. The two largest unitholders of Enable, OGE Energy Corp. and CenterPoint Energy Inc., which also control the general partner of Enable, have entered into support agreements, pursuant to which they have agreed to vote their Enable units in favor of the merger, upon effectiveness of the S-4 Registration Statement with the SEC. These two unitholders own approximately 79.2 percent of Enable’s outstanding common units. The transaction is expected to close in mid-2021 and is subject to the satisfaction of customary closing conditions, including Hart Scott Rodino Act clearance. Upon closing, Enable unitholders are expected to own approximately 12 percent of Energy Transfer’s outstanding common units.
In announcing support for the acquisition, CenterPoint president and CEO Dave Lesar said the transaction will reduce CenterPoint’s exposure to the volatility in the midstream industry.
“I could not be more excited to share this announcement today,” Lesar said. “This transaction aligns with our new long-term growth strategy and gives us the ability to accelerate our transition to a fully regulated business.”