Energy Transfer, U.S. pipeline major said it will acquire rival SemGroup Corp in a deal valued at about $1.35 billion in a stock and cash deal and also build a new pipeline.
Energy Transfer, U.S. pipeline major said it will acquire rival SemGroup Corp in a deal valued at about $1.35 billion in a stock and cash deal and also build a new pipeline.
Energy Transfer is buying SemGroup for $17 a share, 65 per cent higher than SemGroup’s closing price Friday, according to a company statement. The total deal value including debt is $5 billion.
The transaction is expected to close in late 2019 or early 2020, subject to customary approvals. Energy Transfer said the merged companies could generate more than $170 million of annual run-rate synergies, consisting of commercial and operational synergies of $80 million, financial savings of $50 million and cost savings of $40 million.
Energy Transfer said the acquisition of SemGroup will increase its scale across multiple regions and provide increased connectivity for Energy Transfer’s crude oil and NGL transportation businesses.
“Energy Transfer will significantly strengthen its crude oil transportation, terminalling and export capabilities with the addition of the Houston Fuel Oil Terminal (HFOTCO), a crude oil terminal on the Houston Ship Channel with 18.2 million barrels of crude oil storage capacity, five deep-water ship docks and seven barge docks.
The terminal, Energy Transfer said is supported by stable take-or-pay cash flows from diverse, primarily investment grade customers.
Energy Transfer also revealed plans to construct a new crude oil pipeline, the Ted Collins Pipeline, to connect HFOTCO to Energy Transfer’s Nederland Terminal.
This is an approximately 75-mile crude oil pipeline between the Houston Ship Channel and Nederland, Texas to provide a strategic connection between two of the largest crude oil terminals in the U.S., Energy Transfer’s Nederland terminal and the HFOTCO terminals.
Source: Pipeline ME
