Energy Transfer Partners LP (ETP) agreed to acquire Energy
Transfer Equity LP's (ETE) stake in ETP Holdco Corp. through a
$3.75 billion cash and stock deal that will help simplify the
companies' structures.
Energy Transfer Partners and Energy Transfer Equity are
affiliated master limited partnerships that have been focusing
their business on natural-gas pipelines as a supply glut prompts
producers to look for more ways to ship the fuel to markets.
Energy Transfer Equity closed its $3.7 billion deal for Southern
Union Group in March 2012, while Energy Transfer Partners completed
its roughly $5.3 billion acquisition of Sunoco Inc. in October. The
companies formed ETP Holdco in 2012 to own the equity interests in
Southern Union and Sunoco.
The companies said Energy Transfer Equity will receive $1.4
billion in cash and $2.35 billion of Energy Transfer Partners
units. The deal is expected to close in the second quarter.
Energy Transfer Equity, which owns the general partner and
incentive distribution rights of Energy Transfer Partners, also
agreed to forego all of the incentive-distribution-rights payments
on the newly issued Energy Transfer Partners units for the first
eight consecutive quarters after the deal closes. It then will
receive 50% of the IDR payments for the following eight consecutive
quarters.
Last month, Energy Transfer Partners reported its fourth-quarter
earnings rose 49% as the pipeline operator's revenue soared.
Meanwhile, Energy Transfer Equity's profit declined 43% as interest
expenses increased.
Shares of Energy Transfer Partners and Energy Transfer Equity
closed Wednesday at $48.53 and $57.11, respectively. Both were
inactive premarket.
Write to Melodie Warner at melodie.warner@dowjones.com
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