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Kinder Morgan to acquire Copano Energy for $5 billion

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Staff writer |
Kinder Morgan Energy Partners (KPM)Kinder Morgan Energy Partners (KPM) and Copano Energy announced that KMP will acquire all of Copano's outstanding units for approximately $5 billion.


The transaction has been approved by the boards of directors of both companies and it will be a 100 percent unit for unit transaction with an exchange ratio of .4563 KMP units per Copano unit. Copano unitholders will receive $40.91 per Copano common unit based on KMP's closing price as of January 29, 2013, representing a 23.5 percent premium to Copano's close on the same date. The transaction, which is expected to close in the third quarter of 2013, is subject to customary closing conditions, including regulatory approval and a vote of the Copano unitholders. TPG, Copano's largest unitholder with more than 14% of its outstanding equity has agreed to support the transaction.

Copano, a natural gas company with operations primarily in Texas, Oklahoma and Wyoming, provides comprehensive services to natural gas producers, including natural gas gathering, processing, treating and natural gas liquids fractionation. Copano owns an interest in or operates about 6,900 miles of pipelines with 2.7 billion cubic feet per day (Bcf/d) of natural gas throughput capacity and 9 processing plants with more than 1 Bcf/d of processing capacity and 315 million cubic feet per day of treating capacity.

Richard D. Kinder"As a result of this acquisition, we will be able to pursue incremental development in the Eagle Ford Shale play in south Texas, gain entry into the Barnett Shale Combo in north Texas and the Mississippi Lime and Woodford Shales in Oklahoma. We continue to be bullish on the domestic shale plays and believe they will drive substantial future growth at KMP," said KMP chairman and CEO Richard D. Kinder.

R. Bruce Northcutt"Through this transaction, Copano will become part of a larger, investment grade organization with stable cash flows and the financial resources to fund our increasing number of high-return growth projects. We are committed to continuing to support our customers with the highest quality service, and expect that KMP's size and scale will allow us to provide even more value for customers. In addition, we expect this combination will provide opportunities for our many talented employees," said Copano president and CEO R. Bruce Northcutt.

The acquisition of Copano is expected to be accretive to cash available for distribution to KMP unitholders upon closing. The transaction is expected to be modestly accretive to KMP in 2013, given the partial year, and about $0.10 per unit accretive for at least the next five years beginning in 2014.

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