In the one of the largest mergers this year of a domestic public company — and the largest in 2023 of a publicly traded oil and gas concern — Tulsa-based natural gas transmission giant ONEOK has agreed to acquire crosstown energy infrastructure rival Magellan Midstream for $18.8 billion.
ONEOK agreed to pay $25 in cash per share of Magellan, along with an exchange of 0.6670 shares of ONEOK common stock. The cash and stock imply a $67.50 price of Magellan units, representing a 22 percent premium based on Friday’s closing prices. Once the deal is closed — as expected in Q3 2023 — Magellan will become a 100 percent owned subsidiary of ONEOK. The deal includes ONEOK’s assumption of Magellan debt.
Stephen B. Allen, senior vice president and general counsel of ONEOK, tapped Kirkland & Ellis as outside legal advisors. Douglas May, SVP and general counsel of Magellan, chose Latham & Watkins and Richards, Layton & Finger for outside advice. Allen and May are alumni of GableGotwals, a prominent Oklahoma law firm.
The Kirkland team advising ONEOK was led from Houston by corporate partners Sean Wheeler, Debbie Yee, Camille Walker and John Furlow; tax partner David Wheat. Partner Rob Fowler advised on executive compensation, partner Julian Seiguer on capital markets and partner Rachel Lichman on debt finance.
The Latham team advising Magellan was led by Houston partners Ryan Maierson and Kevin Richardson, with associates Denny Lee, Ben Marek, Molly Elkins and Justin Reinking. Advice was also provided on executive compensation, employment and benefits by Washington, D.C. partner David Della Rocca and Washington, D.C. counsel Laura Szarmach, with associate Bryce Williamson; on antitrust matters by Washington, D.C. partner Jason Cruise, with associates Caitlin Fitzpatrick and Ivy Ziedrich; on tax matters by Houston partner Tim Fenn and Bryant Lee, with associates Mike Rowe and Dylan White; on environmental matters by Los Angeles/Houston partner Joshua Marnitz, with associate Joseph Kmetz; on energy regulatory matters by Washington, D.C. partner Patrick Nevins; and on finance matters by Houston partner Craig Kornreich, with associates Max Fin and Michael Basist.
On the finance side Goldman Sachs is acting as financial advisors to ONEOK and Goldman Sachs Bank USA is providing bridge financing for the deal. BofA Securities and TPH&Co, the energy business of Perella Weinberg Partners also advised ONEOK.
For Magellan, Morgan & Stanley advised.
While both companies are energy midstream operators, ONEOK focuses its network on the gathering, processing, transportation and storage of Natural Gas Liquids. Magellan owns the longest refined petroleum pipeline system in the country through which it holds access to nearly half the U.S. refining capacity.
The combined company will own more than 25,000 miles of liquids-oriented pipelines, including complementary assets at the Gulf Coast and Mid-Continent market hubs. ONEOK said in a statement that the combined liquids-focused portfolio will increase ONEOK product offerings and international export opportunities, as well as operational synergies that could exceed $400 million “within two to four years.”