Kinder Morgan to Buy El Paso for $38 Billion
El Paso Corp. LNG Storage Tanks
Stephen Morton/Bloomberg
Storage tanks at the El Paso Corp. liquified natural gas Elba Island terminal near Savannah, Georgia.
Storage tanks at the El Paso Corp. liquified natural gas Elba Island terminal near Savannah, Georgia. Photographer: Stephen Morton/Bloomberg
El Paso Corp. Headquarters in Houston
Brett Coomer/Bloomberg
El Paso Corp. headquarters in Houston, Texas.
El Paso Corp. headquarters in Houston, Texas. Photographer: Brett Coomer/Bloomberg
Kinder Morgan CEO Richard Kinder
Kinder Morgan Inc. via Bloomberg
Kinder Morgan Chief Executive Officer Richard Kinder.
Kinder Morgan Chief Executive Officer Richard Kinder. Source: Kinder Morgan Inc. via Bloomberg
Pipeline Construction in Wyoming
Matthew Staver/Bloomberg
Pipe is stacked for the construction of the Kinder Morgan section of the Rockies Express natural gas pipeline outside Laramie, Wyoming in 2006.
Pipe is stacked for the construction of the Kinder Morgan section of the Rockies Express natural gas pipeline outside Laramie, Wyoming in 2006. Photographer: Matthew Staver/Bloomberg
Kinder Morgan Inc. agreed to buy El Paso Corp. (EP) for about $38 billion in cash, stock and assumed debt, creating the largest U.S. natural gas pipeline network.
The offer is valued at $26.87 per El Paso share, or 37 percent more than their Oct. 14 closing price, Houston-based Kinder Morgan said in a statement today. The offer is comprised of $14.65 in cash, 0.4187 shares of Kinder Morgan, and 0.64 Kinder Morgan warrants, the statement said.
“This once in a lifetime transaction is a win-win opportunity for both companies,” Richard Kinder, who is chairman and chief executive officer of Kinder Morgan and will hold those posts in the combined company, said in the statement. “The transaction is expected to produce immediate shareholder value (upon closing) through strong cash flow accretion and offers significant future growth opportunities.”
Kinder Morgan intends to sell the exploration and production assets of El Paso, the statement said. The transaction is expected to close in the second quarter of 2012, creating the fourth-largest energy company in North America, according to the statement.
The combination will result in a cost savings of about $350 million a year, the statement said.
To contact the editor responsible for this story: Dan Hart at dahart@bloomberg.net; Alexis Leondis in New York at aleondis@bloomberg.net
To contact the editor responsible for this story: Kevin Miller at kmiller@bloomberg. net
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