Cheniere Moves to Streamline With $1 Billion Deal for Unit

Cheniere Energy Inc. is offering about $1 billion for the 20 percent of Cheniere Energy Partners LP Holdings LLC it doesn’t already own in a stock swap as it moves to streamline its corporate structure.

Cheniere, the first company to export U.S. shale gas, is offering 0.5049 Cheniere shares for each outstanding share of the holding company that owns 56 percent of the unit that operates a gas export terminal, according to a statement Friday. That’s a premium of about 3 percent, based on Thursday’s closing prices. Cheniere, began shipping LNG overseas from its Sabine Pass liquefied natural gas terminal in Louisiana earlier this year.

Cheniere Chief Executive Officer Jack Fusco, who took the job in May, has promised to simplify the company’s operations as it moves beyond developing export terminals into operating one that regularly sends out tankers full of shale gas.

“There’s no need to have Cheniere Energy Partners LP Holdings LLC out there,” Andy DeVries, a New York-based analyst for CreditSights Inc., said by phone Friday.

The transaction is subject to the execution of a definitive agreement and approval by the boards of Cheniere, Cheniere Energy Partners LP Holdings LLC and a conflicts committee established by the board of Cheniere Energy Partners LP Holdings LLC. It’s expected to close by the 2017 first quarter, according to a presentation on the company’s website.

“The proposed transaction is attractive to investors in Cheniere Partners Holdings who, as new LNG shareholders, would have the opportunity to participate in the future success of the entire Cheniere complex,” Fusco said in the statement.

Cheniere Energy Partners LP Holdings LLC rose on the news while Cheniere fell, placing the offer about 58 cents lower than the target’s price in intraday trading Friday.

Arbitrage Traders

That pricing reflects initial positions by traders based on past experience that the final price for similar “squeeze outs” of minority shareholders has tended to be 5 percent to 10 percent above the first offer, Ted Chen, a fund manager at Water Island Capital LLC, said by phone Friday.

Trading after about 60 days may influence directors of Cheniere Energy Partners LP Holdings LLC whether to hold out for a higher offer, he said.

Cheniere Energy Partners LP Holdings LLC rose 4.4 percent to $22.19 at 11:57 a.m. in New York. Cheniere fell 1.4 percent to $42.75. Cheniere Energy Partners LP, also controlled by Cheniere, rose 2.9 percent to $29.06.

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