Enterprise, Oiltanking Partners Enter Subsidiary Merger Agreement
Houston-based Enterprise Products Partners LP and Oiltanking Partners LP have entered a merger agreement under which Oiltanking would merge with a subsidiary of Enterprise in a unit-for-unit exchange. Approval and adoption of the merger requires approval by holders of a majority of the outstanding Oiltanking Partners common units. An Enterprise subsidiary, which will own a sufficient number of Oiltanking common units to approve the merger on behalf of all Oiltanking unit holders, has executed a support agreement in which it has irrevocably agreed to consent to the merger.
“We are pleased to announce the execution of this merger agreement that would result in the merger of Oil-tanking Partners into Enterprise,” said Michael A. Creel, CEO of the general partner of Enterprise. “The combination of Enterprise’s system of midstream assets and Oil-tanking Partners’ access to waterborne markets and crude oil and petroleum products storage assets would extend and broaden Enterprise’s midstream energy services business. Upon completion of the merger, Oiltanking Partners unit holders would benefit from Enterprise’s scale, diversification, and financial flexibility; visibility to growth driven by over $6 billion of capital projects under construction; a significant increase in cash distributions; and more daily liquidity from ownership of Enterprise common units.”
In October, Enterprise said it had acquired the general partner and related incentive distribution rights in Oiltanking Partners held by Oiltanking Holding Americas Inc. Enterprise paid about $4.41 billion to Oiltanking Holding—$2.21 billion in cash and about 54.8 million Enterprise common units. Enterprise also paid $228 million to assume notes receivable issued by Oiltanking Partners and its subsidiaries. Enterprise also submitted a proposal to the conflicts committee of the general partner of Oiltanking Partners to merge Oiltanking with, and into, Enterprise.
“We are pleased to announce the execution of this merger agreement that would result in the merger of Oil-tanking Partners into Enterprise,” said Michael A. Creel, CEO of the general partner of Enterprise. “The combination of Enterprise’s system of midstream assets and Oil-tanking Partners’ access to waterborne markets and crude oil and petroleum products storage assets would extend and broaden Enterprise’s midstream energy services business. Upon completion of the merger, Oiltanking Partners unit holders would benefit from Enterprise’s scale, diversification, and financial flexibility; visibility to growth driven by over $6 billion of capital projects under construction; a significant increase in cash distributions; and more daily liquidity from ownership of Enterprise common units.”
In October, Enterprise said it had acquired the general partner and related incentive distribution rights in Oiltanking Partners held by Oiltanking Holding Americas Inc. Enterprise paid about $4.41 billion to Oiltanking Holding—$2.21 billion in cash and about 54.8 million Enterprise common units. Enterprise also paid $228 million to assume notes receivable issued by Oiltanking Partners and its subsidiaries. Enterprise also submitted a proposal to the conflicts committee of the general partner of Oiltanking Partners to merge Oiltanking with, and into, Enterprise.
Upon completion of the merger, expected in early 2015, total consideration paid by Enterprise would be about $6 billion. The merger terms were negotiated, reviewed, and approved by the Oiltanking Partners’ conflicts committee, its general partner, and board of directors. Closing of the merger is subject to customary closing conditions, including effectiveness of a registration statement related to the issuance of new Enterprise common units to Oiltanking Partners unit holders.
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