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ETE To Acquire ETP in Blockbuster $62B Transaction

August 2, 2018 Claire Poole

(Aug. 2) – In the latest and one of the largest simplification transactions in the oil and gas midstream industry, Dallas-based Energy Transfer Equity announced late Wednesday it plans to acquire affiliate Energy Transfer Partners for $62 billion: $27 billion in stock and $35 billion in debt assumption.

The merger will create a $90 billion energy infrastructure giant.

Energy Transfer Equity currently owns the general partner of Energy Transfer Partners.

The deal is expected to close in the fourth quarter if it clears a majority of the unaffiliated unit-holders of Energy Transfer Partners.

The transaction is similar to what Kinder Morgan did in 2014 when it hoovered up its various master limited partnerships for $70 billion, creating a $140 billion company. That prompted further combinations among related entities in the midstream industry.

Vinson & Elkins counseled Energy Transfer Partners on the transaction. Partners Lande Spottswood and Steve Gill and senior associate Brittany Sakowitz led the team with assistance from associates Yong Eoh, Burke Wendt and David Lassetter.

Partner Ryan Carney provided tax advice with help from associate Christine Mainguy and a partner in the firm’s Washington, D.C. office.

Latham & Watkins represented Energy Transfer Equity on the merger. Houston partners Bill Finnegan and Debbie Yee and associates Kevin Richardson, Thomas Verity and Daniel Harrist led the group.

Specialists included Houston partner Tim Fenn and associate Bryant Lee on tax matters along with a partner in the firm’s Los Angeles office: and Houston partner Craig Kornreich with counsel Pamela Kellet on finance.

Energy Transfer Equity’s conflicts committee used financial advisor Citi (Michael Jamieson, Claudio Sauer and Jason Miner) and legal advisor Potter Anderson & Corroon.

Energy Transfer Partners’ conflicts committee tapped Barclays as its financial advisor (Keith Burba and Jeremy Michael) and Richards Layton & Finger as its legal counsel.

Tom Mason is the general counsel of Energy Transfer Equity. The University of Texas law graduate previously was a partner at V&E.

Jim Wright is the general counsel of Energy Transfer Partners. The South Texas College of Law graduate previously was associate general counsel of Enterprise Products and senior counsel at El Paso Corp.

Analysts at Tudor, Pickering, Holt said the transaction was long awaited and will streamline the partnerships’ structure and alleviate overhang. But they noted that the offer of 1.28 of a unit of Energy Transfer Equity for each Energy Transfer Partners unit provides only a “modest” 11 percent premium.

They think the collapse of the limited partner/general partner structure and elimination of associated incentive distribution rights “should assuage investor concerns on alignment.”

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