El Paso Pipeline Partners LP (NYSE: EPB) announced April 28 it will acquire $2 billion natural gas assets in a drop down acquisition from Kinder Morgan Inc. (NYSE: KMI).

EBP will gain 50% interest in Ruby Pipeline, 50% interest in Gulf LNG and 47.5% interest in Young Gas Storage from the owner of its general partner. The company previously announced that KMI would offer to sell (drop down) these assets to EPB. A drop down transaction is the acquisition of assets by a corporation followed by a contribution of those assets to a partnership.

The transaction value includes $1.012 billion of proportionate debt at Ruby and Gulf LNG, resulting in an equity purchase price of $972 million (consistent with EPB’s budget).

The transaction is a win-win for EPB and KMI, said Richard D. Kinder, chairman and CEO, said in an April 28 press release.

"These assets will generate substantial, stable cash flow to EPB unitholders for many years to come, and KMI will reduce its debt outstanding and continue to participate in the cash flows from these assets through its general and limited partner interests in EPB," Kinder said.

The purchase, which is expected to close in May and be effective April 30, was approved by the independent members of the board of directors of KMI, and by the conflicts committee and the board of directors of EPB’s general partner following the receipt of separate fairness opinions from different investment banks.