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Linn Energy, LLC Message Board

  • rlp2451 rlp2451 Jan 30, 2013 7:26 AM Flag

    OT: Kinder Morgan Buying Copano

    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.

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    • 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).

      • 1 Reply to lizahuang54321
      • 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.


      Kinder Morgan Energy Partners LP KMP +1.45% agreed to acquire Copano Energy LLC CPNO +0.83% in a $3.23 billion deal as the pipeline company looks to expand its midstream services.

      Kinder Morgan Energy said it will swap 0.4563 of a share for each Copano share, valuing Copano at $40.91 a share—a 24% premium to Tuesday's $33.13 close.

      The total deal is worth about $5 billion including the assumption of debt, and is expected to close in the third quarter.

      TPG Capital LP, Copano's largest shareholder with roughly a 14% stake, has agreed to support the transaction.

      Copano, based in Houston, operates primarily in Texas, Oklahoma and Wyoming. The company owns an interest in or operates about 6,900 miles of pipelines and nine processing plants.

      Actually it is surprising. A significant amount of foot print is redundant so the only reason to pay such a large premium would be the Wyoming right of ways and the processing.

      Suggesting EPD is significantly undervalued even after the recent run up.

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