NRGY has a high cost, highly seasonal propane gas unit. The cost of capital is way too high and the returns frankly suck big time.
NRGY paid a fortune for two propane businesses on a per customer basis. The distribution system to deliver propane to homeowners is inefficient, archaic, and very high cost.
Granted NRGY has some interesting pipeline and storage assets but I doubt EPD would have any interest in owning the retail propane operations. Perhaps if NRGY were to be acquired in two pieces... one being the retail propane businesses by another retail propane distributor like Suburban Propane or the other big propane MLP leaving EPD to get the pipeline and storage assets..... that may be possible but highly unlikely.
I wondered about the NRGY propane unit,too. Then I remembered the kind of close cooperation between EPD and ETP in some matters. Since ETP has a big propane unit, might EPD buy NRGY and merge the NRGY propane unit with ETP's? The combined propane unit could be spun off as a big, separate company to everyone's benefit.
Then why not have NRGY buy propane units from ETP rather than do an acquisition followed by an IPO? It seems to me that just gets into more of the paper crapola that investment bankers make fortunes off of but investors get ripped off in the end. All the associated costs of acquisitions and dispositions and IPOs and spinoffs are borne by shareholders in the form of lower dividend and/or distribution income.
I cannot imagine EPD buying out NRGY unless the price was quite low. EPD is paying about 6X-7X (one year out) for the M2 assets and getting similar returns on organic projects.
ETP and EPD have indeed worked together and have close ties via mutual ownership interests on the GP level. Would think if someone was nuying it would be ETP, but again cannot think the price asked would work.