Energy Transfer Equity LP (NYSE: ETE) said Aug. 1 it plans to buy out Energy Transfer Partners LP (NYSE: ETP) in a long-awaited transaction following regulatory changes to the U.S. tax policy earlier this year that removed certain benefits for MLPs.
The transaction includes the purchase of all outstanding public limited partner units in Energy Transfer Partners in a unit-for-unit exchange worth $27 billion in ETE stock.
In connection with the transaction, Energy Transfer Equity’s incentive distribution rights (IDRs) in Energy Transfer Partners will be canceled.
Analysts with Tudor, Pickering, Holt & Co. (TPH) said the acquisition was a long-awaited transaction that streamlines Dallas-based Energy Transfer's structure while also alleviated overhang.
A slew of pipeline operators including Enbridge Inc. (NYSE: ENB), Williams Cos. Inc. (NYSE: WMB) and Cheniere Energy Inc. (NYSE: LNG) also announced similar plans for consolidation in May after a U.S. Federal Energy Regulatory Commission ruling eliminated income tax allowances for some MLPs.
"Collapse of limited partner/general partner structure and elimination of associated IDRs should assuage investor concerns on alignment," TPH analysts said in a research note on Aug. 2. "Assuming no near-term distribution revision, [the] total payout is reduced by about $800 million after adjusting for incremental units."
Under the terms of the transaction, ETP unitholders (other than ETE and its subsidiaries) will receive 1.28 common units of ETE for each common unit of ETP they own. The transaction is expected to close fourth-quarter 2018.
Recommended Reading
NGP Backs Wing Resources with $100MM to Buy Permian Mineral Interests
2025-04-02 - Wing Resources VIII, which is backed by NGP Royalty Partners III, will focus on acquiring “high-quality” mineral and royalty interests across the Permian Basin, the company said.
Boardwalk Project to Grow Southern Access for Appalachian NatGas
2025-04-02 - Midstream company Boardwalk Pipeline is holding an open season for future new capacity on the Texas Gas Transmission pipeline.
Exxon Mobil Vice President Karen McKee to Retire After 34 Years
2025-04-02 - Matt Crocker will succeed Karen T. McKee as vice president of Exxon Mobil and president of its product solutions company.
Paisie: How a World in Flux Impacts Oil Prices
2025-04-02 - Sanctions, tariffs and production strategies are buffeting crude markets as wild cards like tariffs and geopolitical conflicts make headlines.
Oil Prices Fall into Negative Territory as Trump Announces New Tariffs
2025-04-02 - U.S. futures rose by a dollar and then turned negative over the course of Trump's press conference on April 2 in which he announced tariffs on trading partners including the European Union, China and South Korea.