Kinder Morgan Energy Partners, L.P. (KMP: Quote) announced that it has agreed to buy Copano Energy L.L.C.’s (CPNO: Quote) for about $5 billion, including the assumption of debt. The transaction, which is expected to close in the third quarter of 2013.Kinder Morgan Energy said that the transaction will be a 100 percent unit for unit transaction with an exchange ratio of 0.4563 KMP units per Copano unit. The consideration to be received by Copano unitholders at $40.91 per unit based on KMP’s closing price as of Jan. 29.
The acquisition of Copano is expected to be accretive to cash available for distribution to KMP unitholders upon closing.
The general partner of KMP, Kinder Morgan, Inc. (KMI: Quote), has agreed to forego a portion of its incremental incentive distributions in 2013 in an amount dependent on the time of closing. Additionally, KMI intends to forgo $120 million in 2014, $120 million in 2015, $110 million in 2016 and annual amounts thereafter decreasing by $5 million per year from this level. The transaction is expected to be modestly accretive to KMP in 2013, given the partial year, and about $0.10 per unit accretive for at least next five years beginning in 2014.
The acquisition will be immediately accretive to KMI’s cash available to pay dividends, even after KMI foregoes a portion of the incremental incentive distributions. The increase in KMI’s cash available to pay dividends is expected to be about $25 million in 2014 growing to about $70 million in 2016.
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by RTT Staff Writer
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