The Kinder Morgan family is getting back together under one roof. That’s the result of a transaction announced Aug. 10 that Kinder Morgan Inc. will acquire all of the outstanding equity securities of Kinder Morgan Energy Partners LP, Kinder Morgan Management LLC and El Paso Pipeline Partners LP.
When the deal is finalized, the Kinder Morgan entities will become a single, publicly traded company, according to chairman and CEO Richard D. Kinder, adding that the transaction “dramatically simplifies the Kinder Morgan story.”
“This combined entity will be the largest energy infrastructure company in North America and the third largest energy company overall with an estimated enterprise value of approximately $140 billion,” Kinder said. “Additionally, we will have a leading position in each of our business segments and operate in the rapidly growing North American energy infrastructure sector.”
The acquisition also provides significant tax benefits for Kinder Morgan Inc. shareholders from depreciation deductions associated with the upfront purchase and future capital expenditures.
Kinder Morgan Energy Partners, Kinder Morgan Management and El Paso Pipeline Partners were represented in the negotiations by committees comprised exclusively of the independent members of the boards of the respective entities. The boards of all the Kinder Morgan companies have voted to recommend the transaction to their respective unitholders and shareholders. Each transaction is conditioned on the closing of the other transactions. The transaction is expected to be finalized by the end of 2014.
Barclays and Citi acted as financial advisors to Kinder Morgan Inc. Barclays is providing committed financing for the transaction, and Weil Gotshal & Manges and Bracewell & Giuliani acted as legal counsel to Kinder Morgan Inc. Jefferies acted as financial advisor to Kinder Morgan Energy Partners and Kinder Morgan Management, with Baker Botts acting as legal counsel for the entities. Tudor, Pickering, Holt & Co. acted as financial advisor to El Paso Pipeline Partners, with Vinson & Elkins acting as legal counsel.
The combined Kinder Morgan entities own an interest in or operate approximately 80,000 miles of pipelines and 180 terminals. Kinder Morgan’s pipelines transport natural gas, gasoline, crude oil, carbon dioxide and other products, and its terminals store petroleum products and chemicals and handle such products as ethanol, coal, petroleum coke and steel.
“In the opportunity-rich environment of today’s energy infrastructure sector,” Kinder said, “we believe this transaction gives us the ability to grow Kinder Morgan Inc. for years to come.”