(Bloomberg) — Oneok Inc. has agreed to purchase Magellan Midstream Companions LP in an $18.8 billion cash-and-stock transaction that will create one of many largest oil and gasoline pipeline operators within the U.S.
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The deal will see every Magellan shareholder obtain $25 in money and 0.6670 Oneok shares per unit, representing a 22% premium over closing costs on Might 12, the businesses stated Sunday in a joint assertion. . The transaction consists of $8.8 billion in new fairness and the idea of $5 billion of current internet debt.
Pipeline operators are more and more turning to mergers and acquisitions to develop because the transition to renewable power reduces the necessity for brand new hyperlinks and threatens to make a few of their current property redundant. The acquisition will give Oneok, which presently solely transports pure gasoline and its derivatives, entry to a community of pipelines and terminals for crude oil and refined merchandise that stretches from Texas to Minnesota.
The mixed firm can have a complete enterprise worth of $60 billion, based on the assertion. That may put it among the many 5 largest U.S. pipeline operators by that standards, based on information compiled by Bloomberg.
“We see this as a daring transfer to redirect the long-term technique of each firms, driving the professional forma entity nearer to the highest of the category from a scale and diversification perspective,” JR Weston and Justin Jenkins, Raymond analysts James Monetary Inc. stated in a word to shoppers. Whereas the “superb deal” comes at a excessive worth for Oneok shareholders, it may nonetheless make sense, they stated. “We’re followers of halfway consolidation.”
The transaction is anticipated to shut within the third quarter, topic to shareholder and regulatory approvals. Oneok has secured $5.25 billion in absolutely dedicated bridge financing for the proposed money consideration.
Oneok expects the transaction to have a optimistic impression on each earnings per share and free money circulate per share, with scale positive factors of at the least $200 million a yr.
Each Oneok and Magellan are headquartered in Tulsa, Oklahoma.
(Updates with supply particulars beginning within the second paragraph)
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