Transaction Type
Announce Date
Post Date
Estimated Price

To acquire entity that owns general partner of midstream-focused Enterprise Product and non-controlling general partner of limited partner interests in Energy Transfer Equity LP.

Enterprise Products Partners LP, Houston, (NYSE: EPD) plans to acquire Enterprise GP Holdings LP (NYSE: EPE) in a deal valued at approximately $8 billion.

Enterprise Products will offer 1.5 units per Enterprise GP share. Enterprise GP currently has 139.2 million shares outstanding. Enterprise Products units are currently trading at $38.01 each. The offering is a 16% premium based on Enterprise GP's closing prices on Sept. 3, according to Enterprise Products.

Enterprise GP will merge with a subsidiary of Enterprise Products, becoming a new subsidiary of Enterprise Products. Enterprise Products will also cancel the 2% economic general partner interest, the general partner incentive distribution rights in Enterprise Products and approximately 21.6 million Enterprise Products common units currently owned by Enterprise GP.

Enterprise GP owns the general partner of Enterprise Products in addition to its limited partner interests. It also owns non-controlling general partner and limited partner interests in Energy Transfer Equity LP.

Enterprise Products has oil and gas pipelines and storage facilities throughout the U.S., including 16,300 miles of NGL pipelines, approximately 19,200 miles of onshore natural gas pipeline systems in Alabama, Colorado, Louisiana, Mississippi, New Mexico, Texas, and Wyoming and approximately 4,400 miles of onshore crude oil pipelines in Oklahoma, New Mexico, and Texas.

Certain affiliates of privately held Enterprise Products Co. (EPCO) that own approximately 76% of outstanding Enterprise GP units have agreed to vote their Enterprise GP units in favor of the merger. In addition, an EPCO affiliate has agreed to waive the distributions it would otherwise be entitled to receive on certain Enterprise Products common units for the first five years after closing.

Enterprise Product's general partner president and chief executive Michael Creel says, "We are pleased to announce our agreement to combine these two partnerships, which should reduce Enterprise Products' long-term cost of capital and simplify our organizational structure. Just like the landmark action taken in 2002 to eliminate our general partner's 50% incentive distribution rights, this transaction would not be possible without the continued support of EPCO and its affiliates and their agreement to waive a significant amount of distributions they would otherwise be entitled to receive during the first five years after the merger closes."

Benefits to Enterprise Products unitholders are expected to include lowering long-term cost of capital through the permanent elimination of the general partner's incentive distribution rights, allowing Enterprise Products to enhance its cash accretion from investments in organic growth projects and acquisitions and allowing Enterprise Products to maintain its competitive position when pursuing growth opportunities.

Enterprise GP's general partner president and CEO Ralphn Cunningham says, "We believe Enterprise GP unitholders will benefit from the immediate increase in the value of their post-merger partnership units and the distributions they will receive after the merger. We also believe Enterprise GP unitholders will benefit from their ownership of EPD units received in the exchange as this merger will enhance Enterprise Products's ability to pursue its growth objectives with the resulting lower cost of capital which should provide Enterprise GP unitholders with an attractive total return on their investment."

Pro forma, Enterprise Products expects affiliates of EPCO and management will own approximately 39% of Enterprise Products' outstanding common units.

Financial advisors for this transaction were Barclays Capital Inc. is financial advisor for Enterprise Products. Credit Suisse Securities (USA) LLC is financial advisor for the general partner of Enterprise Products. Morgan Stanley & Co. Inc. is financial advisor for of the general partner of Enterprise GP.

Andrews Kurth LLP and Morris, Nichols, Arsht, & Tunnell LLP were legal advisors for Enterprise Products. Skadden, Arps, Slate, Meagher & Flom LLP is legal advisor for the general partner of Enterprise Products. Vinson and Elkins is legal advisor for Enterprise GP. Baker Hostetler and Richards, Layton and Finger are legal advisors for the general partner of Enterprise GP.

The merger is expected to close during the fourth quarter.