Enterprise Products and Oiltanking Partners Announce Merger Agreement

abarrelfullabarrelfull wrote on 14 Nov 2014 06:46
Tags: enterprise n-america storage usa


Enterprise Products Partners L.P. (NYSE:EPD, “Enterprise”) and Oiltanking Partners, L.P. (NYSE:OILT, “Oiltanking Partners”) announced today that Enterprise and Oiltanking Partners have entered into a merger agreement. Under the terms of the merger agreement, Oiltanking Partners would merge with a subsidiary of Enterprise in a unit-for-unit exchange. Unitholders of Oiltanking Partners (other than Enterprise and its subsidiaries) would receive 1.3 Enterprise common units for each Oiltanking Partners common unit. This exchange ratio represents a 5.6 percent premium to Oiltanking Partners unitholders based on the respective closing prices for Enterprise and Oiltanking Partners common units on September 30, 2014, the day before the merger was originally proposed. Relative to the respective closing prices for Enterprise and Oiltanking Partners common units on November 10, 2014, the day before the parties entered into the merger agreement, the 1.3 exchange ratio represents a 10.4 percent premium to Oiltanking Partners unitholders. Based on the latest cash distribution declared by Enterprise and Oiltanking Partners with respect to the third quarter of 2014, this exchange ratio would result in a 74 percent increase in cash distributions for Oiltanking Partners unitholders.

The approval and adoption of the merger agreement require approval by holders of a majority of the outstanding Oiltanking Partners common units. A subsidiary of Enterprise, which will own a sufficient number of Oiltanking Partners common units to approve the merger on behalf of all Oiltanking Partners unitholders, has executed a support agreement with Oiltanking Partners in which it has irrevocably agreed to consent to the merger. This subsidiary will own approximately 54.8 million Oiltanking Partners common units, or approximately 66 percent of the total Oiltanking Partners common units then outstanding, following the conversion of approximately 38.9 million Oiltanking Partners subordinated units into common units. The one-for-one conversion of these subordinated units into common units will occur on November 17, 2014, the business day immediately following payment of the Oiltanking Partners cash distribution scheduled to be paid on November 14, 2014. Approval and adoption of the merger agreement will be submitted to a vote of the unitholders of Oiltanking Partners.

“We are pleased to announce the execution of this merger agreement that would result in the merger of Oiltanking Partners into Enterprise,” said Michael A. Creel, chief executive officer of the general partner of Enterprise. “The combination of Enterprise’s system of midstream assets and Oiltanking Partners’ access to waterborne markets and crude oil and petroleum products storage assets would extend and broaden Enterprise’s midstream energy services business. Upon completion of the merger, Oiltanking Partners unitholders would benefit from Enterprise’s scale, diversification and financial flexibility; visibility to growth driven by over $6 billion of capital projects under construction; a significant increase in cash distributions; and more daily liquidity from ownership of Enterprise common units.”

On October 1, 2014, Enterprise announced that it had acquired the general partner and related incentive distribution rights, 15,899,802 common units and 38,899,802 subordinated units in Oiltanking Partners held by Oiltanking Holding Americas, Inc. (“Oiltanking Holding”). Enterprise paid total consideration of approximately $4.41 billion to Oiltanking Holding comprised of $2.21 billion in cash and 54,807,352 Enterprise common units. Enterprise also paid $228 million to assume notes receivable issued by Oiltanking Partners and its subsidiaries. Enterprise also announced that it had submitted a proposal to the conflicts committee of the general partner of Oiltanking Partners to merge Oiltanking Partners with and into Enterprise. Under the terms of the proposal, Enterprise would have exchanged 1.23 Enterprise common units for each Oiltanking Partners common unit. The exchange ratio of 1.3 Enterprise common units for each Oiltanking Partners common unit represents a 5.7 percent increase compared to the exchange ratio in the earlier proposal.

Upon completion of the merger, which is expected to occur in early 2015, the total consideration paid by Enterprise for the Oiltanking Partners general partner and related incentive distribution rights and the limited partner units would be approximately $6.0 billion.

The merger terms were negotiated, reviewed and approved by the conflicts committee of the board of directors of the general partner of Oiltanking Partners and approved by the board of directors of the general partner of Oiltanking Partners. The Oiltanking Partners conflicts committee is comprised of the independent members of the board of directors of Oiltanking Partners’ general partner. As part of their evaluation process, the Oiltanking Partners conflicts committee retained Jefferies LLC as its financial advisor, Latham & Watkins LLP as its legal advisor and Richards, Layton & Finger, P.A. as its special Delaware legal advisor. Vinson & Elkins L.L.P. also acted as special legal counsel to Oiltanking Partners.

Citi acted as financial advisor and Andrews Kurth LLP and Akin Gump Strauss Hauer & Feld LLP acted as legal counsel to Enterprise.

The closing of the merger is subject to customary closing conditions, including effectiveness of a registration statement related to the issuance of new Enterprise common units to Oiltanking Partners’ unitholders.


Related News

{"module":"feed\/FeedModule","params":{"src":"http:\/\/killajoules.wikidot.com\/feed\/pages\/pagename\/blog%3A_start\/tag\/pipeline\/category\/blog\/limit\/10\/t\/My+Blog","limit":"3","module_body":"* %%linked_title%%"}}

Looking for information on the Pipeline sector?


Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License