Energy Transfer to buy US pipeline operator Regency in $18-billion deal
By JIM POLSON
Bloomberg
Energy Transfer Partners agreed to buy all the publicly traded units in Regency Energy Partners, a pipeline company that it controls, in a deal that values the target at about $18 billion, including debt.
The cash-and-stock deal offers Regency investors $26.89/unit, a 13% premium based on the Jan. 23 closing price, the companies said in a joint statement. Regency holders will get 0.4066 units of Energy Transfer plus a cash payment of 32 cents/unit.
Energy Transfer Equity controls Regency through ownership of its general partner and already owns about 22% of the traded units, according to data compiled by Bloomberg.
The deal is the latest attempt to simplify the often complex structures of pipeline companies. Billionaire Kelcy Warren, 59, is chairman and CEO of Energy Transfer Partners, as well as chairman and the biggest shareholder of Energy Transfer Equity, which controls both Energy Transfer and Regency.
Last year, fellow pipeline owner Kinder Morgan announced plans to consolidate three partnerships in a $44 billion deal.
“In light of the current volatility in commodity prices and the changes in the capital markets, it became apparent over the last several months that Regency needed more scale and diversification, along with an investment-grade balance sheet, to continue its growth,” Mike Bradley, CEO of Dallas-based Regency, said in the statement.
Marcellus Shale
With the deal, Energy Transfer “intends to become a major player in the Marcellus and Utica shales and believes that prof forma this merger, it is ideally positioned to achieve that goal in the near term,” according to the statement.
The acquisition would make Dallas-based Energy Transfer the second-largest master-limited partnership, a structure that allows entities to pass through much of their earnings to investors without paying federal income tax.
Energy Transfer’s group of companies owns and operates about 71,000 miles (114,000 kilometers) of pipelines handling natural gas, liquids derived from natural gas, fuel and crude oil, according to today’s statement.
The transaction has been approved by both boards and is expected to close in the second quarter, the companies said.
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