The deal will have Energy Transfer Equity offering shares of ETE to investors in ETP for each share of Energy Transfer Partners stock that they own. The offer is specifically for 1.28 shares of ETE stock for each share of Energy Transfer Partners stock. This does not include Energy Transfer Partners stock held by ETE or its subsidiaries.
Energy Transfer Equity says that it is expecting to see several benefits from the merger with Energy Transfer Partners. This includes it being immediately accretive to ETE’s distributable cash flow per unit.
Energy Transfer Equity also notes that it is expecting the deal to further align economic interests in the Enter Transfer family. Another bonus that the company expects from the merger is that will simplify its overall structure. This should reduce complexity and make transparency easier for investors.
Energy Transfer Equity is also working with its general partner for a special part of the deal. This will have its general partner not exercising its right to purchase additional shares of ETE stock. Instead, the company will give them new Class A units that will allow them to maintain their current voting rights.
The acquisition of Energy Transfer Partners by Energy Transfer Equity already has the approval of both companies’ Boards of Directors. Now it just needs approval from shareholders and regulators. If all goes well, the two companies are expecting the deal to close in the fourth quarter of 2018.
ETP stock was up 12% and ETE stock was up 1% as of Thursday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.