BP Plc agreed on Dec. 20 to acquire BP Midstream Partners LP, the British oil major’s pipeline operator in the U.S., in a buyout transaction worth more than $700 million.
“In line with BP’s strategy introduced last year of becoming an integrated energy company, this transaction will deepen BP’s interests in, and simplifies the ownership and governance structure of, midstream assets that support integration and optimization of its fuels value chain in the U.S.,” BP said in a company release.
According to the release, BP will acquire all outstanding common units of BP Midstream Partners not already owned directly or indirectly by BP, representing roughly 47.8 million common units, in an all-stock transaction. In exchange, BP Midstream unitholders will receive 0.575 of an American depositary share of BP, translating to a total price of about $723 million for the deal, according to Reuters calculations.
Formed in 2017 by BP, BP Midstream Partners is a fee-based, growth-oriented MLP—a vehicle that had historically been used in the oil and gas industry to finance pipelines and other midstream projects. However, new rules implemented by U.S. regulators around the use of incentive distribution rights in recent years have driven a series of MLP roll-ups of pipeline firms.
BP already owns roughly 54% of the partnership, Reuters reported citing Refinitiv data shows. The agreement follows an offer made by BP in August to acquire the publicly traded units of BP Midstream Partners.
The transaction is expected to close in first-quarter 2022, subject to customary approvals.
BofA Securities is financial adviser and Baker Botts LLP is acting as legal adviser to BP. Vinson & Elkins LLP is serving as BP Midstream Partners’ legal adviser. Tudor, Pickering, Holt & Co. is financial adviser and Gibson, Dunn & Crutcher LLP is acting as legal adviser to the conflicts committee of the BP Midstream Partners board.
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