Energy giant Kinder Morgan Inc. is buying all the outstanding stock of Kinder Morgan Energy Partners LP, Kinder Morgan Management LLC and El Paso Pipeline Partners LP for $44 billion in stock and cash, consolidating the four entities into one publicly traded company. In doing so, the combined company is folding the tax-favored master limited partnerships Kinder Morgan helped pioneer in the 1990s into a conventional corporate structure. It also will assume $27 billion in debt, putting the total transaction value at about $71 billion.
Under terms of the complex deal, announced Aug. 11, Kinder Morgan Energy Partners (KMP) unit holders would receive 2.1931 Kinder Morgan Inc. (KMI) shares and $10.77 in cash for each KMP unit, a premium of 11.4 percent above KMP’s closing price on July 16, the reference point used by all the parties in the transaction. Kinder Morgan Management (KMR) shareholders, meanwhile, would get 2.4849 KMI shares for each KMR share, a 16 percent premium above KMR’s closing price. El Paso Pipeline partners (EPB) unit holders would receive 0.9451 KMI shares and $4.65 in cash for each EPB unit, an 11.2 percent premium above EPB’s closing price. Both KMP and EPB unit holders would be able to elect cash or KMI stock consideration subject to proration.
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