Shares of Inergy L.P. (NYSE: NRGY) soared on Monday after the marketer and distributor of propane announced that it has agreed to merge its business with Crestwood Midstream Partners L.P. in a cash and stock deal.
The move is expected to enable the merged entity to tap growing demand for storage and pipeline services in the North American region. Following the merger, the new entity will look to cater shale fields which include the Marcellus Shale, Bakken Shale, Eagle Ford Shale and the Barnett Shale, said the two companies in statement.
As more and more oil producers look to produce oil from shale fields in the U.S., the demand for infrastructure required for collecting, processing and distributing oil and natural gas have increased significantly.
In a press release, the Companies said that the combined entity will have an enterprise value of $7 billion.
The deal which also encompasses both Inergy and Crestwood’s affiliates will be completed in a phased manner and is expected to close by the third quarter of this year.
Led by Crestwood’s Chief Executive Robert Phillips, the merged entity will be headquartered in Houston Texas.
According to the agreement, both Inergy and LP and Inergy Midstream will continue to remain listed at NYSE after the deal closes while Crestwood Midstream will be amalgamated with wholly owned Inergy Midstream.
Shares of Crestwood Midstream Partners LP also climbed about 5.50% in early trade on Monday.
While Simpson Thacher & Barlett LLP and Akin Gump Strauss Hauer & Feld LLP provided legal counseling to Crestwood Midstream, financial advice was offered by Citigroup Global Markets.
For Inergy L.P. and Inergy Midstream, Greenhill & Co acted as the lead financial adviser, Jefferies LLC offered co-financial advisory and exclusive technical advisor while legal counseling was provided by Vinson & Elkins LLP.
Commenting over the deal, Phillips said in a statement, “We view this transaction as a merger of equals through which we are creating a larger, more diversified operating platform that will be highly attractive to investors, customers, creditors and employees.”
Recent Comments