SemGroup Corp (NYSE: SEMG), a Tulsa, Oklahoma-based midstream energy services company, has agreed to be acquired by Energy Transfer LP (NYSE: ET) in a cash-and-stock transaction valued at about US$5.1 billion, including debt.
The deal is expected to close later this year or in early 2020.
In a separate release, Energy Transfer said the benefits of the acquisition include a crude oil gathering and transportation presence in Canada’s Alberta Basin.
Earlier this year, SemGroup partnered with U.S. private equity firm KKR to create SemCAMS Midstream ULC, a $1.75-billion midstream infrastructure platform based in Calgary. In February, SemCams acquired the local assets of Meritage Midstream ULC for $600 million.
SemGroup to be Acquired by Energy Transfer in $5 Billion Transaction
SemGroup to merge with one of the largest, diversified midstream energy companies in North America
Benefits of scale will strengthen and accelerate growth opportunities for SemGroup assets and improve access to capital markets
SemGroup shareholders to benefit from significant, immediate premium and future upside of combined company
TULSA, Okla., Sept. 16, 2019 (GLOBE NEWSWIRE) — SemGroup® Corporation (NYSE: SEMG) today announced it has entered into a definitive merger agreement whereby SemGroup will be acquired by Energy Transfer LP (NYSE: ET) (“ET” or “Energy Transfer”) in a unit and cash transaction valued at approximately $5.1 billion, including the assumption of debt and other liabilities.
Under the terms of the agreement, which has been unanimously approved by the Boards of Directors of both companies, SemGroup shareholders will receive $6.80 per share in cash and 0.7275 of an ET common unit for each SemGroup share, or approximately 40% cash and 60% equity. The equity consideration received is expected to be treated as a tax-free transaction. The transaction values SemGroup at $17.00 per share, and represents a 65% premium to SemGroup’s closing share price of $10.28 on September 13, 2019, and an 87% premium to SemGroup’s 20 day volume weighted average price (VWAP) as of the same date. Upon closing, SemGroup shareholders are expected to own approximately 2.2% of ET’s outstanding common units.
SemGroup Chief Executive Officer, Carlin Conner, said, “This strategically and financially compelling combination will result in SemGroup joining one of the largest midstream energy companies in the country, with a strong footprint in all major U.S. production basins. The combined entity’s size, scale and financial profile will ensure that SemGroup’s assets, including our Gulf Coast terminal, mid-continent footprint and our Canadian joint venture SemCAMS Midstream, benefit from significant growth well into the future. We look forward to leveraging the increased pipeline connectivity and expanded terminalling infrastructure that the combined entity provides.”
Conner continued, “SemGroup has been exploring a range of strategic alternatives aimed at increasing shareholder value, and determined that this combination with ET is in the best interests of shareholders — providing immediate value, a significant premium, and opportunity to participate in the future upside of the combined business. Our transaction with ET underscores the strength of SemGroup’s assets, and is a testament to our employees’ dedication, hard work and focus on providing safe, efficient and reliable service while creating an asset portfolio that is highly desired.”
The transaction is expected to close by late 2019 or early 2020, subject to obtaining regulatory approvals, SemGroup shareholder approval and other customary closing conditions.
Jefferies LLC acted as exclusive financial advisor to SemGroup and Kirkland & Ellis LLP acted as legal counsel. BofA Merrill Lynch acted as exclusive financial advisor to Energy Transfer and Latham & Watkins LLP acted as legal counsel.
SemGroup® Corporation (NYSE: SEMG) moves energy across North America through a network of pipelines, processing plants, refinery-connected storage facilities and deep-water marine terminals with import and export capabilities. SemGroup serves as a versatile connection between upstream oil and gas producers and downstream refiners and end users. Key areas of operation and growth include western Canada, the Mid-Continent and the Gulf Coast. SemGroup is committed to safe, environmentally sound operations. Headquartered in Tulsa, Okla., the company has additional offices in Calgary, Alberta; Denver, Colo.; and Houston, Texas. SemGroup uses its Investor Relations website and social media outlets as channels of distribution of material company information. Such information is routinely posted and accessible on SemGroup’s Investor Relations website at www.semgroup.com, SemGroup’s Twitter account and LinkedIn account.
SemGroup Investor Relations: