Navitas Midstream Partners Holdings announced Monday the sale of all of its interests in the Woodlands-based Navitas Midstream Partners to an affiliate of publicly traded Enterprise Products Partners for $3.25 billion in cash.
Navitas is a portfolio company of funds managed by private equity firm Warburg Pincus.
The deal is expected to close this quarter if it clears regulators.
The transaction continues a wave of consolidation in the midstream industry, including Enable Midstream’s sale last year to Dallas-based Energy Transfer for $7.2 billion in stock.
Jefferies served as financial advisor to Navitas, including Pete Bowden in Houston.
Kirkland & Ellis served as Navitas’ legal advisor. The team was led by corporate partners Adam Larson, Jhett Nelson and Randy Santa Ana and included corporate associates Tess Dennis, Oscar Leija, Alexiz Magro-Malo and Hyrum Clarke; real assets partner Chad Smith and associate Isaac Bate; and capital markets partners Julian Seiguer and Jennifer Wu and associate Rebecca Chang.
The group also included executive compensation partner Rob Fowler and associate Carly Rhodes; labor and employment partners Madeline Klebanov and R.D. Kohut and associate Kayla Davis; employee benefits of counsel Jack Bernstein and associate Chris Chase; real estate partner Roberto Miceli; environmental transactions partners Paul Tanaka and Ty’Meka Reeves-Sobers; tax partners Mark Dundon and Joe Tobias; and antitrust partners Ian John and Chuck Boyars and associate Chris Brassfield.
Partners Joe Perillo, Terry Radney and Rachel Fitzgerald at Locke Lord in Houston counseled longtime client Enterprise, which goes by its ticker symbol EPD.
In-house counsel included Enterprise’s VP of legal Charlie San Miguel and senior legal counsel Walker Clarke and Navitas general counsel Philip Peacock.
The Association of Corporate Counsel’s Houston Chapter and The Texas Lawbook last week named Charlie San Miguel as the recipient of the 2021 Houston Corporate Counsel Award for Senior Counsel of the Year for a Midsized Legal Department (6-20 lawyers). See the story here.
Peter Kagan and John Rowan led the deal for Warburg in New York.
The transaction surprised analysts at Tudor Pickering Holt given Enterprise’s recent capital discussions and messaged preference for downstream assets.
“While the relatively inexpensive portfolio cost should help mitigate initial market concern, implied DCF [discounted cash flow] yield comes at only a slight premium to standalone EPD metrics,” analyst Colton Bean in Denver said. “And increasing exposure to the wellhead without a clear read through to NGL [natural gas liquids] logistics is tough to reconcile with messaged strategy.”
Bean said the purchase would serve as an entry point into the Midland Basin and will be paired alongside Enterprise’s existing Delaware capacity.
Founders R. Bruce Northcutt, Bryan Neskora and Jim Wade previously built Copano Energy into a substantial enterprise before its 2013 sale to Kinder Morgan for $5 billion. Wachtell, Lipton, Rosen & Katz counseled Copano on that deal while Weil Gotshal & Manges and then-Bracewell & Giuliani represented Kinder Morgan.