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.