Stepping up its focus on Eurocentric renewables, Spain’s Enagás SA announced Wednesday that it is divesting its 30.2 percent interest in Kansas-based Tallgrass Energy to Blackstone for $1.1 billion.
Enagás plans to use proceeds from the transaction to bolster its commitment to develop a renewable hydrogen infrastructure for the benefit of the European Union.
Latham & Watkins is representing Enagás in the deal with a team led by Houston partners Ryan Lynch and Kevin Richardson, along with María José Descalzo in Madrid. The rest of the corporate team includes associates Cesar Leyva, Brian Bruzzo, and Brock Jones.
Advice was also provided on tax matters by Houston partners Tim Fenn and Jim Cole and Madrid partners Ivan Rabanillo and Jordi Dominguez, with associate Christine Mainguy; on regulatory matters by Washington, D.C. partners Jason Cruise and Damara Chambers and Madrid partner José María Jiménez-Laiglesia; on environmental matters by Los Angeles/Houston partner Josh Marnitz; and on benefits matters by Century City/Bay Area partner Julie Crisp, with associate Aaron Tso.
Vinson & Elkins advised Blackstone with a team led by Houston partners Lande Spottswood and Alex Robertson with assistance from associates Chase Browndorf, Lauren Perillo and Waleed Vohra. Also advising were partners Ryan Carney and Paige Anderson and associates Tyler Underwood and Steve Campbell (tax); partner Dario Mendoza and associate Kenneth Strain (executive compensation/benefits); partner Matt Dobbins (environmental); and partner Hill Wellford and counsel Ryan Will (antitrust).
In 2020, Enagás was part of a Blackstone-led consortium — along with GIP, USS and NPS — that purchased Tallgrass in a $3.5 billion take-private deal. Enagás paid about $1.6 billion for its stake in Tallgrass.
Although the company says the deal will generate an estimated $389 million accounting loss in its 2024 income, cash provided from the sale will allow Enagás to continue its long-planned rotation to renewable assets for the EU market. An EU mandate, Royal Decree-law 8/2023 designated Enagás as provisional manager of the EU’s Hydrogen Backbone Network.
Blackstone has been consolidating its ownership, both in Tallgrass and the more than 7,000 miles of FERC-regulated pipelines and storage facilities that Tallgrass controls. Last month, for instance, Tallgrass took 100 percent ownership of the Rockies Express Pipeline with its purchase of a 25 percent passive interest owned by Phillips 66.
Like Enagás, Phillips 66 described the divestiture as part of an ongoing recalibration of non-core assets.