QEP Resources Inc.’s (NYSE: QEP) QEP Field Services Co. has entered into an agreement to sell its midstream business, including QEP’s 58% interest in QEP Midstream Partners LP (NYSE: QEPM), the company said Oct. 19.

Tesoro Logistics LP (NYSE: TLLP) will pay $2.5 billion in cash, including $230 million to refinance debt at QEPM, for the midstream assets. QEP will retain ownership of Field Services’ Haynesville Gathering System.

The price was in line with many analysts’ expectations.

The sale comes after months of pressure from activist shareholder Jana Partners, which suddenly cashed out its 7.2% position in QEP after dictating a spinoff or sale of QEP’s midstream assets. The hedge fund Jana appears to have lost money in its attempt to raise QEP’s share price. Share prices last week were about $21.84. Jana had 13 million shares with a cost basis of $30 to $31 per share when it bought most of its shares in October 2013.

QEP said the decision to sell the midstream business is a result of the company’s ongoing review of strategic alternatives to maximize shareholder value. Its board of directors, in consultation with its financial advisers, unanimously determined that the outright sale of the midstream business for cash is the best course to achieve the highest value for QEP shareholders.

The sale avoids a complicated spinoff for QEP while putting money into QEP’s capital program, said Pearce Hammond, managing director and co-head of E&P research for Simmons & Co. International.

Post-closing, QEP will emerge as a more competitive and financially stronger independent E&P company with assets in two of North America’s most prolific crude oil provinces, the Williston and Permian basins, and low-cost, high-quality natural gas properties in the Rocky Mountains and in northwest Louisiana, said Chuck Stanley, chairman, president and CEO.

“The sale of our midstream business is a significant milestone in the strategic repositioning of our company, as we believe QEP will be better positioned to deliver continued growth in production and adjusted EBITDA in 2015 and beyond,” he said.

Sunil Sibal, senior analyst, Global Hunter Securities, viewed the announced sale of QEP Field Services unfavorably for QEPM.

“It potentially takes away upside growth potential for QEPM through the drop down of assets from QEPFS,” Sibal said. “This announced transaction could increase uncertainty for QEPM's growth strategy. With TLLP trading at a much lower yield of 3.7% vs. QEPM’s 5.6% … QEPM’s growth strategy is likely to come under question.”

Tesoro said the assets are high-quality natural gas gathering pipelines and processing facilities in the Rockies, Uinta and North Dakota. The strategically located assets will extend TLLP's logistics business, offering integrated crude oil and natural gas services. The company also acquired a highly skilled workforce.

The deal will transform Tesoro into a full logistics company and diversify the customer mix to about 50% third-party revenues. In conjunction with the transaction, TLLP announced a 19.4 million common unit offering and intention to offer $1.3 billion in senior notes.

“We expect the wave of consolidation to be a tailwind for midstream MLPs, E&Ps, refiners and utilities,” said Ethan Bellamy, senior analyst, Baird Energy.

The transaction is anticipated to close in the fourth quarter of 2014.

Deutsche Bank Securities Inc. and Goldman Sachs & Co. were financial advisers to QEP and Latham & Watkins LLP and Wachtell, Lipton, Rosen and Katz were legal advisers.

BofA Merrill Lynch was exclusive financial adviser to Tesoro Logistics GP LLC.

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