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Cheniere Energy, Inc. LNG recently agreed to acquire all of the remaining outstanding units of Cheniere Energy Partners LP Holdings, LLC CQH through a stock for unit transaction. The acquiree, Cheniere Partners Holdings, is expected to add tremendous value to Cheniere Energy’s business, as discussed below.
Per the deal, the unitholders of Cheniere Partners Holdings will get 0.4750 shares of Cheniere Energy for each unit they hold. Based on the closing price as of Jun 18, the transaction is valued at $30.93 per unit of Cheniere Partners Holdings.
Notably, 92% of Cheniere Partners Holdings’ units are already owned by Cheniere Energy. The acquisition is expected to be over by September, following which Cheniere Partners Holdings will merge with a wholly-owned subsidiary of Cheniere.
At the end of the first quarter, Cheniere Partners Holdings possessed 48.6% interest in Cheniere Energy Partners, L.P. CQP, which owns liquefaction facilities of natural gas located at the Sabine Pass LNG terminal. Moreover, Cheniere Energy Partners owns the Creole Trail Pipeline, which connects the terminal with interstate pipelines and six natural gas liquefaction trains, two of which are yet to come online.
Notably, the deal — anticipated to qualify as a “tax-free reorganization” for the acquiree’s unitholders — follows the Federal Energy Regulatory Commission’s policy revision issued in March, related to federal income taxes. The policy revision triggered similar reactions earlier from other midstream companies such as Enbridge Inc. ENB.
Price Performance and Zacks Rank
Houston, TX-based Cheniere Energy has gained 39.6% in the past year compared with 20.3% rally of its industry. Currently, the company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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