Energy Transfer Signals Course Change With SemGroup Acquisition

Energy Transfer agreed on Sept. 16 to acquire Tulsa, Okla.-based SemGroup in a cash and stock transaction valued at roughly $5.1 billion.

Emily

Patsy

HartEnergy.com

Mon, 09/16/2019 - 08:05 AM

Energy Transfer Signals Course Change With SemGroup Acquisition

SemGroup’s Houston Fuel Oil Terminal (HFOTCO) located on the Houston Ship Channel. Energy Transfer launched plans on Sept. 16 to construct a new crude oil pipeline, the Ted Collins Pipeline, to connect HFOTCO to Energy Transfer’s Nederland Terminal. (Source: SemGroup Corp.)

Energy Transfer LP agreed on Sept. 16 to acquire SemGroup Corp. in a multibillion-dollar acquisition that analysts claim “flies in the face” of recent messaging from the Dallas-based midstream company.

In a release, Energy Transfer said it offered a sizable premium to acquire the Tulsa, Okla.-based company in a $5.1 billion cash and stock deal that includes the assumption of $5 billion of debt. According to the company release, the transaction values SemGroup at $17 per share, representing a 65% premium to its closing share price on Sept. 13.

Though both companies justified the transaction with over $170 million of expected annual synergies, analysts with Tudor, Pickering, Holt & Co. (TPH) called the SempGroup acquisition a setback for Energy Transfer.

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In this article

NYSE: ET Energy Transfer LP

NYSE: SEMG SemGroup Corp.

Chart reflects yearly performance.

Emily Patsy

Emily Patsy is the associate managing editor for Hart Energy’s Digital News Group. She's responsible for the daily news flow and also manages the A&D Watch and Energy Pulse weekly newsletters.

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