Goldman Sachs Group Inc., the fifth-biggest U.S. bank by assets, will get a $20 million fee for advising El Paso Corp. if the pipeline company completes a planned $21 billion sale to Kinder Morgan Inc.
Goldman Sachs is the second-largest shareholder of Kinder Morgan and has two directors on the Houston-based pipeline company’s board. Goldman Sachs didn’t take part in negotiations with Kinder Morgan or express an opinion on the deal price, Kinder Morgan said today in a regulatory filing.
Goldman Sachs had been advising Houston-based El Paso on an unrelated plan to spin off the company’s exploration and production division when Kinder Morgan made an unsolicited offer, Kinder Morgan said. Goldman Sachs collected $5 million for that work and would have gotten another $25 million if the spinoff had been completed, Kinder Morgan said.
Goldman Sachs’s private-equity arm invested alongside Kinder Morgan Chief Executive Officer Richard Kinder to take his company private in a 2007 leveraged buyout, and the New York-based investment bank retains a stake after an initial public offering this year. Goldman Sachs directors on the Kinder Morgan board, Henry Cornell and Kenneth Pontarelli, didn’t take part in discussions about the El Paso offer, Kinder Morgan said.
Morgan Stanley advised El Paso on negotiations with Kinder Morgan and gave an opinion that the sale price was fair. The bank may collect a total of $35 million for its advice if the deal is completed, Kinder Morgan said.
Kinder Morgan’s financial advisers, Evercore Partners Inc. and Barclays Plc, will get a total of $15 million each if the acquisition is completed, Kinder Morgan said.
Andrea Rachman, a Goldman Sachs spokeswoman, declined to comment.