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Part 2 of Targa Resources’ acquisition deal with Atlas

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Nov. 26 2019, Updated 7:12 p.m. ET

Atlas Energy and Targa Resources Corp transaction

As we learned previously in this series, the second part to the deal will see Targa Resources Corp (TRGP)—which holds general partner interests in Targa Resources Partners LP (NGLS)—acquire Atlas Pipeline Partners, L.P.’s (APL) general partner, Atlas Energy LP (ATLS).

This transaction is subject to certain conditions, as we observed in Part 2 of this series.

After spinning off its non-midstream assets, ATLS’ assets will include its general partner and incentive distribution rights in APL, as well as 5.8 million APL units.

Following the spinoff and the closing of the APL-NGLS transaction, TRGP will acquire ATLS for a total consideration of $1.9 billion. This includes 10.35 million TRGP shares issued to ATLS, valued at $1.259 billion, as well as $610 million in cash.

In exchange, TRGP will acquire a larger asset base and a higher dividend growth outlook. We’ll cover this growth outlook later in this series.

Assumed ownership

Current Targa Resources shareholders will own approximately 80% of the pro forma shares outstanding. Meanwhile, current ATLS unit-holders will own approximately 20% of the pro forma shares outstanding.

Key ETFs

NGLS, APL, and ATLS are all components of the Global X Funds ETF (MLPA). TRGP is part of the Alerian Energy Infrastructure ETF (ENFR). NGLS and APL are also components of the Alerian MLP (AMLP)—the largest MLP ETF.

Before we take a look at how the deal complements Targa’s assets, let’s take a look at Atlas Pipeline’s assets.

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