Not a surprise, they have been doing JVs for some time.
(Reuters) - Kinder Morgan Energy Partners LP (KMP.N) said it plans to buy Copano Energy LLC (CPNO.O) for an equity value of about $3.22 billion, a deal that will broaden the company's oil and gas pipeline assets in Texas and Oklahoma.
Based on an exchange ratio of .4563 Kinder Morgan units, Copano shareholders will receive $40.91 per share, which is a 23.5 percent premium to Copano's close on Tuesday.
Shares of Houston-based Kinder Morgan Energy closed at $89.66 on Tuesday on the New York Stock Exchange.
Including assumption of debt, the total deal value is about $5 billion.
"As a result of this acquisition, we will be able to pursue incremental development in the Eagle Ford Shale play in south Texas, gain entry into the Barnett Shale Combo in north Texas and the Mississippi Lime and Woodford Shales in Oklahoma," Kinder Morgan CEO Richard Kinder said in a statement.
The deal will add at least 10 cents per unit to Kinder Morgan's earnings for at least the next five years beginning in 2014.
TPG Capital Management LP, Copano's largest shareholder with more than a 14 percent stake, has agreed to support the deal, Kinder Morgan said in a statement.
The transaction is expected to close in the third quarter of 2013, Kinder Morgan said.
Citi acted as financial advisor for Kinder Morgan while Copano was advised by Barclays Capital Inc and Jefferies & Company Inc.
Kinder Morgan, the largest midstream company in North America, was created when it finalized its purchase of El Paso Corp last year in a deal valued around $38 billion.
I own CPNO and am not really thrilled with the deal.
I won't be selling due to tax considerations but would rather have kept CPNO than get KMP, given the pretty small increase in distributions following the deal (math posted on the CPNO board last night).
It is a rotten deal for CPNO holders. CPNO was finally reaching an inflection point, where the billions in Eagle Ford projects would have finally started to kick in and result in material distribution growth. I do not own any CPNO, but I do hold KMP, so it is nice to see them pick up some quality assets, though, this deal adds like 3% to DCF in '13 before increasing in '14 and there after.
KMP is getting the better end of the deal, though CPNO holders do pick up a very modest distribution increase (and more to come) as KMP increases nearly every quarter. They also get a nice little bump in equity price, so all in all, a ok deal, but CPNO holders are losing the upside.