SemGroup has entered into a merger agreement with Energy Transfer, one of the largest, diversified midstream energy companies in North America in a transaction valued at $5.1 billion.
The transaction values SemGroup at $17 per share and represents a 65% premium to SemGroup’s closing share price of $10.28 on September 13. Upon closing, SemGroup shareholders are expected to own 2.2 % of Energy Transfer’s outstanding common units.
The acquisition will increase Energy Transfer’s scale across multiple regions and provide increased connectivity for Energy Transfer’s crude oil and NGL transportation businesses.
Energy Transfer will significantly strengthen its crude oil transportation, terminaling and export capabilities with the addition of the Houston Fuel Oil Terminal, which has 18.2 million barrels of crude oil storage capacity and five deep-water ship docks and seven barge docks. It is supported by stable take-or-pay cash flows from diverse, primarily investment grade customers.
Energy Transfer has announced plans to build a new 75-mile crude oil pipeline, the Ted Collins Pipeline, to connect the terminal to its Nederland Terminal.
Additionally, the acquisition expands Energy Transfer’s crude oil and NGL infrastructure by adding crude oil gathering assets in the DJ Basin in Colorado and the Anadarko Basin in Oklahoma and Kansas, as well as crude oil and natural gas liquids pipelines connecting the DJ Basin and Anadarko Basin with crude oil terminals in Cushing, Oklahoma.
Carlin Conner, SemGroup CEO, says: ‘This strategically and financially compelling combination will result in SemGroup joining one of the largest midstream energy companies in the country, with a strong footprint in all major US production basins. The combined entity’s size, scale and financial profile will ensure that SemGroup’s assets, including our Gulf Coast terminal, mid-continent footprint and our Canadian joint venture SemCAMS Midstream, benefit from significant growth well into the future.
‘We look forward to leveraging the increased pipeline connectivity and expanded terminaling infrastructure that the combined entity provides.
The transaction is expected to close by late 2019 or early 2020.