Plains All American Pipeline LP is to acquire Pacific Energy Partners LP for a total price of US$2.4 billion, including the assumption of debt and estimated transaction costs. The deal, which has been approved by the boards of both companies, is expected to close by the end of 2006, subject to unitholder approval and regulatory consents.
Under the terms of the agreement, Pacific Energy's operating subsidiaries will be directly or indirectly owned by Plains All American, whose management team and board of directors will continue in their current roles and manage the combined company.
Plains All American expects to achieve short-term synergy savings of around $30 million on an annualised basis, increasing to around $55 million over the next few years, and further increasing to over $70 million in the long-term, according to Chairman and CEO Greg Armstrong.
Plains All American handles over 3 million barrels of oil per day through its transportation and storage network in the USA and Canada, which includes more than 15,000 miles of pipelines. Pacific Energy owns oil terminals and more than 4,500 miles of pipelines in California, Philadelphia and the Rocky Mountains. It has made several acquisitions in recent years – including US$455 million worth of terminal and pipeline assets from Valero last September, and the Rangeland and MAPL pipeline systems in 2004.