Blackstone Infrastructure Partners announced Jan. 31 that it agreed to acquire a controlling interest in Tallgrass Energy for $3.3 billion.
The purchase shows that private investors continue to have strong interest in the oil and gas industry despite lower commodity prices, particularly in the much needed infrastructure part of the sector.
The deal includes all of Tallgrass’ general partner, which is owned by Kelso & Co., the Energy & Minerals Group (EMG) and Tallgrass management-owned Tallgrass KC, and a 44 percent interest in Tallgrass Energy.
Affiliates of Singapore sovereign wealth fund GIC will be a minority investor.
The consideration implies an equity valuation of $26.80 per share, or about an 11 percent premium over the stock’s closing price on Tuesday, analysts at Tudor Pickering Holt wrote in a note.
The parties expect to close the transaction this quarter.
The Texas Lawbook mentioned Tallgrass as a possible takeout target on Jan. 7, citing a Morgan Stanley report. Others mentioned were SemGroup Corp. and Buckeye Partners.
Texas lawyers from four different firms were involved in the deal.
Baker Botts partner Mollie Duckworth in Austin was the lead legal advisor on the deal to Tallgrass Energy and assisted by associates Rachel Ratcliffe and Grace Matthews, also of Austin.
The Baker Botts team also included tax partners Jon Nelsen and Michael Bresson, as well as partners Dan Tristan (finance) and Mark Bodron (employment).
EMG’s general counsel and chief operating officer is Laura Tyson, who previously practiced at Baker Botts for more than 15 years.
Vinson & Elkins represented Blackstone with a team led by corporate partners Keith Fullenweider, Alan Beck and Lande Spottswood. They had assistance from senior associates Crosby Scofield and Claire Campbell and associates Alex Robertson, Leslie Vaughn, Jonathan Sapp, Jane Ehinmoro and Kelly King.
The firm’s specialists on the deal were finance associates Caitlin Snelson and Derrick Sweeney; tax partners Ryan Carney and John Lynch and senior associate Allyson Seger; executive compensation and benefits partner Stephen Jacobson; and associates Gina Hancock and Mary Daniel Morgan.
Others were employment and labor partner Sean Becker and associate Robert Sheppard; regulatory counsel Suzanne Clevenger and associate Tray Smith; environmental partner Larry Nettles, senior associate Matthew Dobbins and associate Jennifer Cornejo; and real estate counsel Scot Dixon.
Sidley Austin assisted GIC with a team led out of New York but including tax partner Zackary Pullin in Houston.
Latham & Watkins represented the lenders, including Houston partner Michael Chambers and partner Craig Kornreich, who offices out of Houston and New York.
Others on the Latham team were associates Max Fin and Caroline Robinson Ellerbe and counsel Natalie McFarland – who joined eight years ago from V&E – and Michelle Synhorst.
Citi was Blackstone’s financial advisor, including Michael Jamieson and Tim Kisling in Houston as well as Claudio Sauer in New York.
Tallgrass CEO and president David G. Dehaemers Jr. said in a statement that Blackstone’s scale, long-term capital and investment expertise across the energy industry make it an ideal partner for the business “as we continue to create value and invest capital in accretive growth opportunities.”
Sean Klimczak, Blackstone’s global head of infrastructure, said the transaction represents “a rare opportunity” to invest in a large-scale U.S. midstream infrastructure platform that connects high-production supply basins to key markets and is underpinned by long-term contracts.
Blackstone is funding the purchase through its planned $40 billion infrastructure fund, which it unveiled last year with a $20 billion commitment from the Public Investment Fund of Saudi Arabia. The fund reportedly had a $5 billion first closing in July.