In a more than $7 billion deal, Oklahoma City’s Enable Midstream is merging with Dallas-based Energy Transfer LP. The transaction will include a $10 million cash payment for Enable’s general partner and represents the latest consolidation of companies in the energy downturn that were predicted by many analysts.
Under the agreement, Energy transfer will acquire Enable in an all-equity transaction with a value of $7.2 billion. Enable common unitholders will receive 0.8595 ETC common units for each Enable common unit. In turn, the outstanding Enable Series A preferred unit will be exchanged for 0.0265 Series G preferred units of Energy Transfer.
There was no mention how the acquisition will affect Enable employees. But the company has an estimated 1,700 workers.
Energy Transfer’s acquisition of Enable will increase Energy Transfer’s footprint across multiple regions and provide increased connectivity for Energy Transfer’s natural gas and NGL transportation businesses.
The announcement indicated that the acquisition will strengthen Energy Transfer’s NGL infrastructure by adding natural gas gathering and processing assets in Oklahoma’s Anadarko Basin. It will also give the Dallas company more gas gathering and processing assets in the Arkoma basin across Oklahoma and Arkansas and the Haynesville Shale in East Texas and North Louisiana.
Energy Transfer expects the combined company to generate more than $100 million of annual run-rate cost and efficiency synergies, excluding potential financial and commercial synergies.
The acquisition was approved by ET’s board of directors and committees at Enable. It also involved two of the largest unitholders of Enable, OGE Energy Corp. and CenterPoint Energy, Inc.
OGE and CenterPoint control the General Partner of Enable and have entered into support agreements, pursuant to which they have agreed to vote their Enable units in favor of the merger, upon effectiveness of the S-4 Registration Statement with the SEC.
These two unitholders own approximately 79.2% of Enable’s outstanding common units. The transaction is expected to close in mid-2021 and is subject to the satisfaction of customary closing conditions, including Hart Scott Rodino Act clearance. Upon closing, Enable unitholders are expected to own approximately 12 percent of Energy Transfer’s outstanding common units.
Click here for the Enable announcement.