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ONEOK Acquires ONEOK Partners for $9.3 Billion

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Transaction

On February 1, 2017, ONEOK (OKE) and ONEOK Partners (OKS) announced an agreement. ONEOK will acquire all of the outstanding common units of ONEOK Partners for $9.3 billion in ONEOK common stock. Each common unit of ONEOK Partners will be converted into 0.985 shares of ONEOK stock. It represents a 22.4% premium to ONEOK Partners’ closing price of $44.2 on January 27, 2017. The transaction is expected to close in 2Q17.

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ONEOK Partners will cease to trade publicly after the transaction closes. ONEOK will issue 168.9 million shares in connection with the transaction, representing ~44.5% of the total shares outstanding of the pro forma combined entity. ONEOK’s incentive distribution rights will end after the transaction closes.

ONEOK is expected to have an enterprise value of more than $30 billion after the transaction closes.

Benefits

“Through the acquisition of the 60 percent of the limited partner interests in ONEOK Partners that ONEOK does not already own, ONEOK becomes a standalone operating company with a lower cost of funding and stronger cash flow generation,” said Terry K. Spencer, president and CEO of ONEOK and ONEOK Partners.

“Shareholders of ONEOK are expected to benefit from an increased dividend and higher dividend growth rate,” said Spencer.

“We also anticipate the transaction will provide ONEOK enhanced access to the broader capital markets to support and fund future growth to meet the needs of our customers,” added Spencer.

In the next part, we’ll look at ONEOK’s 2017 guidance in light of the proposed acquisition.

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