Plains All American Pipeline LP, the oil transporter that has grown 45 percent in the last year, offered to buy the shares of PAA Natural Gas Storage LP it doesn’t already own in a deal that values the company at $1.97 billion.
Owners of PAA Natural Gas’s outstanding partnership units would receive .435 units of Plains All American, worth $22.74, the Houston-based companies said today in joint statements. Plains All American is the general partner of PAA Natural Gas and owns 46 percent of its limited-partner units.
The price is a 7.9 percent premium to Plains Natural Gas’s closing price today.
PAA Natural Gas has been in a “defensive posture” as it has seen shrinking profit margins from seasonal differences in gas prices, President Dean Liollio said on the company’s second-quarter earnings call Aug. 6.
“It is clear that the next several years will be challenging for PNG on a stand-alone basis,” Plains All American Chief Executive Officer Greg Armstrong said in the statement.