Energy Transfer has entered into a definitive merger agreement to acquire SemGroup Corp. in a unit and cash transaction valued at $17 per share, or a total consideration of $5 billion, based on the closing price of ET common units on Sept. 13 and including the assumption of debt.
The merger consideration consists of $6.80 in cash and 0.7275 of an ET common unit for each outstanding share of class A common stock of SemGroup, or 40 percent cash and 60 percent equity.
This represents a 65 percent premium to the closing price of SemGroup shares as of Sept.13, 2019. The transaction is expected to close in late 2019 or early 2020, subject to the approval by SemGroup’s stockholders and other customary regulatory approvals. Upon the closing, SemGroup stockholders are expected to own approximately 2.2 percent of Energy Transfer’s outstanding common units.
Energy Transfer’s acquisition of SemGroup will increase Energy Transfer’s scale across multiple regions and provide increased connectivity for Energy Transfer’s crude oil and NGL transportation businesses.
Energy Transfer will significantly strengthen its crude oil transportation, terminalling and export capabilities with the addition of the Houston Fuel Oil Terminal (HFOTCO), a crude-oil terminal on the Houston Ship Channel with 18.2 million barrels of crude oil storage capacity, five deep-water ship docks and seven barge docks.
Energy Transfer is also planning to construct a 75-mile new crude-oil pipeline — the Ted Collins Pipeline between the Houston Ship Channel and Nederland, Texas — to connect HFOTCO to Energy Transfer’s Nederland Terminal. This will provide immediate access to more than 1 million barrels per day of existing crude-oil export capacity, with plans to expand to more than 2 million barrels, at the Nederland and the HFOTCO terminals. The Ted Collins Pipeline is expected to have an initial capacity of more than 500,000barrels per day. Energy Transfer anticipates commercial operations to begin in 2021.
This acquisition also expands Energy Transfer’s crude-oil and NGL infrastructure by adding crude-oil gathering assets in the DJ Basin in Colorado and the Anadarko Basin in Oklahoma and Kansas, as well as crude-oil and natural-gas-liquids pipelines connecting the DJ Basin and Anadarko Basin with crude-oil terminals in Cushing, Okla.
These assets will greatly increase Energy Transfer’s crude-oil and NGL transportation business in the Rockies and Mid-Continent and will complement Energy Transfer’s existing crude-oil and NGL transportation business in the Permian Basin. Energy Transfer’s crude-oil assets on the Gulf Coast will also benefit from the Maurepas Pipeline and its connections to the St. James refining complex. The acquisition will also provide a significant crude-oil gathering and transportation presence in the Alberta Basin in western Canada.
Energy Transfer’s vast network of pipelines handles more than 4 million barrels per day.
