rrb, you have to figure that NRGY already sought that option out before announcing the plan to spinoff the midstream business. The $2.2 billion might be a "fair" price tag for the propane business, but a deal takes a willing buyer and a willing seller. Maybe SPH and Ferrell (or APU) were not that interested at that kind of price before APU bid for the ETP propane business. There are many factors that go into whether a competitor would pay up for NRGY's propane, like whether the competitors could acquire similar assets more cheaply from some of the other independent propane businesses (according to the APU presentation, 59% of the industry is independent) and whether they have more overlapping areas or new areas from an acquisition.
And it's not just the pre-tax deal price that matters, but the after-tax price. It's true that the APU-ETP deal had a stock component to their deal to minimize tax considerations, but I didn't see a summary of what the taxes would be on the cash component of their deal, but note that ETP is much larger than NRGY (in both assets and capitalization) and correspondingly their propane division was a much smaller part of the whole company. The tax hit may only amount to a few dollars per share, which ETP must have judged was an acceptable cost given their need for money to invest in their other higher growing businesses. I own some ETP and not only did they need money to purchase some of the pipeline assets that their parent bought from Southern, but they have an ambitious list of organic projects to fund.
So the bottomline is that although an outright sale of NRGY's propane business may have been easier from a clarity standpoint, the midstream IPO could produce an opportunity for investors. If the midstream MLP units price too low, then you can buy them at the offering and benefit from a better return potential. If they price above the market, then you stand to benefit from your holdings in the parent (which will receive the proceeds and keep the gp and IDRs).