ONEOK to acquire Magellan Midstream Partners
Published by Callum O'Reilly,
Senior Editor
Hydrocarbon Engineering,
ONEOK Inc. and Magellan Midstream Partners L.P. have announced that they have executed a definitive merger agreement under which ONEOK will acquire all outstanding units of Magellan in a cash-and-stock transaction valued at approximately US$18.8 billion including assumed debt, resulting in a combined company with a total enterprise value of US$60 billion. The consideration will consist of US$25 in cash and 0.6670 shares of ONEOK common stock for each outstanding Magellan common unit, representing a current implied value to each Magellan unitholder of US$67.50/unit, for a 22% premium, based on 12 May 2023 closing prices.
The transaction adds a leading, and primarily fee-based, refined products and crude oil transportation business to ONEOK. Magellan's stable, primarily demand-driven businesses are expected to generate significant free cash flow due to low capital expenditure requirements. This acquisition creates a more resilient energy infrastructure company that is expected to produce stable cash flows through diverse commodity cycles.
The transaction is expected to be earnings per share (EPS) accretive beginning in 2024 with EPS accretion of 3% to 7% per year from 2025 through 2027, and free cash flow per share accretion averaging more than 20% from 2024 through 2027. Base forecasted synergies are expected to total at least US$200 million annually.
The combined company will own more than 25 000 miles of liquids-oriented pipelines, with significant assets and operational expertise at the Gulf Coast and Mid-Continent market hubs. ONEOK anticipates this combined liquids-focused portfolio will present significant potential for enhanced customer product offerings and increased international export opportunities. These activities could potentially result in total annual transaction synergies exceeding US$400 million within two to four years.
Read the article online at: https://www.hydrocarbonengineering.com/refining/15052023/oneok-to-acquire-magellan-midstream-partners/
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