bottom line - NRGP holders to get about 10% premium to Fridays NRGY close and .77 of the new units for each old NRGP unit owned. So we should be up about $4 today .....can I get a Hallelujah!!!
"NEW YORK (MarketWatch) -- Inergy L.P. (NRGY 43.37) said Monday it'll buy Inergy Holdings L.P.(NRGP 31.85) in a deal that values the combined energy partnership at about $6 billion. Inergy L.P. said its current cash distribution rate of $2.82 a year will be unchanged as a result of the deal. "The transaction will result in a single, streamlined entity with NRGY's enterprise value exceeding $6 billion based on current market values," Inergy said. Inergy Holdings unitholders will receive 0.77 Inergy L.P. common units in exchange for each common unit. The share offer is a premium to NRGP unitholders of approximately 10% based upon the 20-trading day average closing prices of both securities. The transaction will result in approximately 47.7 million additional units being issued by NRGY. Upon closing of the merger, the former owners of NRGP will own approximately 43.8% of the combined entity."
1. Under the terms of the merger agreement, NRGP unitholders will receive 0.77 NRGY common units in exchange for each NRGP common unit they own at closing, representing a premium to NRGP unitholders of approximately 10% based upon the 20-trading day average closing prices of both securities ending August 3, 2010.
Note: 10% above the 20-trading day average (not today's pricing).
2. As of COB Friday: a 4% premium: Holders of Inergy Holdings /quotes/comstock/13*!nrgp/quotes/nls/nrgp (NRGP 32.71, +0.86, +2.70%) units will receive 0.77 of an Inergy L.P. common unit in exchange for each of their common units. The offer values Inergy Holdings at $33.40 a unit, a premium of $1.29, or 4%, over its closing price of $32.11 a unit on Friday.
A cheap price to pay for distribution rights for NRGP. As a NRGP stockholder I do not like this. The distribution was set to take off. Instead we only get a 4% premium. Market was starting to recognize this (see 20 day premium avg at 10%; COB Friday = 4%).
You are getting a 59% increase in the distribution if you take a few minutes to do the math.
You recieve .77 units of NRGY for each NRGP unit that you own. NRGY pays $2.82, so you are getting what amounts to $2.17 whereas you are currently receiving $1.36. That is a 59% increase in income, versus just a minimal increase in capital. NRGP/NRGY is just arbitraging the difference in valuation.
This is a decent deal for NRGP holders. I would prefer to stay separate to get the better growth, but all good things must come to an end....I made a killing on NRGP, on BGH, on MGG, MWP, KSL, PLX and others that were taken out. The market is very efficient at finding undervalued MLPs and GPs.
"Energy Transfer Partners (ETP), Kinder Morgan Partners (KMP), Inergy LP (NRGY): "People are freaking out... buy, buy, buy! Energy Transfer is terrific... Is it as good as Kinder Morgan Energy Partners? No, but I like that 2-point decline. By the way, Inergy LP is another one that I like very, very much. You know I think those are good stocks. I want you to stick with them."