Kinder Morgan purchase El Paso approximately $38 billion

Kinder Morgan to purchase El Paso for approximately $38 billion

10:01 PM, 17th October 2011
Kinder Morgan to purchase El Paso for approximately $38 billion
Richard D Kinder, Chairman and CEO, Kinder Morgan.


HOUSTON, US: Kinder Morgan Inc (KMI) will acquire all of the outstanding shares of El Paso Corporation (EP) in a transaction that will create the largest midstream and the fourth largest energy company in North America with an enterprise value of approximately $94 billion and 80,000 miles of pipelines. The total purchase price, including the assumption of debt outstanding at El Paso Corporation and including the debt outstanding at El Paso Pipeline Partners LP is approximately $38 billion.

The combined enterprise, including the associated master limited partnerships, Kinder Morgan Energy Partners L P and EPB, will represent the largest natural gas pipeline network in the US, the largest independent transporter of petroleum products in the US, the largest transporter of CO2 in the US and the largest independent terminal owner/operator in the US. The transaction is expected to close in the second quarter of 2012 and is subject to customary regulatory approvals.

“This once in a lifetime transaction is a win-win opportunity for both companies,” said Richard D Kinder, Chairman and CEO, Kinder Morgan.

“El Paso assets are primarily regulated interstate natural gas pipelines that produce substantial, stable cash flow and have access to key supply regions and major consuming markets. The natural gas pipeline systems of the two companies are  complementary, as they primarily serve different supply sources and markets in the US. The transaction is expected to produce immediate shareholder value through strong cash flow accretion and offers significant future growth opportunities,” added Kinder.

The consideration to be received by the EP shareholders is valued at $26.87 per EP share based on KMI’s closing price as of Oct 14, 2011, representing a 47 per cent premium to the 20-day average closing price of EP common shares and a 37 percent premium over the closing price of EP common shares on Oct. 14, 2011.

“Our agreement with Kinder Morgan will provide greater value for our shareholders than we expected through the planned spin-off of our exploration and production business,” said Doug Foshee, Chairman, President and CEO, El Paso Corporation.

In addition to pipelines, the company will own 180 liquid and dry bulk terminals, with total capacities of 107 million barrels of refined petroleum products and 100 million tons of dry bulk, respectively. The company will also produce over 50,000 barrels of oil per day.

Following the closing of the transaction, EP will become a subsidiary of KMI. KMI intends to sell the exploration and production assets of EP.

(C) WOC News




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