Hess Corporation (NYSE: HES) said Friday it will receive $275 million in cash and 115 million newly issued units in Hess Midstream Partners LP (NYSE: HESM) as part of a proposed deal announced by HESM.
HESM will acquire Hess Infrastructure Partners LP (HIP), a 50-50 joint venture between Hess Corp. and Global Infrastructure Partners.
This includes HIP's 80% interest in HESM's oil and gas midstream assets, HIP's water services business and the outstanding economic general partner interest and incentive distribution rights in HESM.
Once the transaction closes, Hess Corp. will own approximately 134 million HESM units, or 47% of Hess Midstream on a consolidated basis, valued at approximately $2.6 billion based on the Oct. 2 closing price per HESM common unit.
"This transaction is compelling for all parties involved and was unanimously approved by each company's board of directors,” Hess Corp. CEO John Hess said in a statement.
"It simplifies the ownership structure of Hess Midstream, provides transparency on the value of Hess' midstream interests and positions Hess Midstream for sustainable growth and value creation as a large-scale, publicly traded midstream company accessible to a broad range of investors."
The transaction is expected to close in the fourth quarter of 2019. Morgan Stanley acted as financial advisor to Hess Corp. for the transaction.
Hess Corp. shares were trading 0.66% higher at the time of publication, while Hess Midstream Partners LP shares were up 3.53%.
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