Energy Transfer LP (NYSE: ET) has announced that it has entered into a definitive merger agreement whereby Energy Transfer will acquire SemGroup Corporation (NYSE: SEMG) in a share and cash transaction valued at approximately $5 billion.
This represents a 65% premium to the closing price of SemGroup shares as of September 13, 2019.
The transaction is expected to close in late 2019 or early 2020, subject to the approval by SemGroup’s stockholders and other regulatory approvals.
Energy Transfer’s acquisition of SemGroup will increase Energy Transfer’s scale across multiple regions.
Energy Transfer will significantly strengthen its crude oil transportation, terminal and export capabilities with the addition of the Houston Fuel Oil Terminal (HFOTCO), a world class 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. HFOTCO is supported by stable take-or-pay cash flows from diverse, primarily investment grade customers. Energy Transfer is also announcing its plans to construct a new crude oil pipeline, the Ted Collins Pipeline, to connect HFOTCO to Energy Transfer’s Nederland Terminal.
Energy Transfer’s crude oil assets on the Gulf Coast will also benefit from SemGroup’s interest in the Maurepas Pipeline and its connections to the St. James refining complex.
Energy Transfer owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all of the major domestic production basins.
Investment funds managed by Alinda Capital Partners sold HOFTCO to SemGroup in June 2017. Following the September 2019 announcement by Energy Transfer, the funds have sold their interest in SemGroup shares.
The funds managed by Alinda Capital Partners continue to hold an interest in the Maurepas Pipeline, acquired in August 2018.