Kinder Morgan Inc. (NYSE: KMI) and Southern Co. (NYSE: SO) entered a strategic joint venture (JV) on July 10 that positions both companies for long-term growth.
Under the JV agreement, Southern will acquire a 50% equity interest in the Southern Natural Gas (SNG) pipeline system from Kinder Morgan. The value of the stake in SNG is about $1.47 billion, the press release said.
SNG is a 7,600-mile pipeline system connecting natural gas supply basins in Texas, Louisiana, Mississippi, Alabama and the Gulf of Mexico to markets in Louisiana, Mississippi, Alabama, Florida, Georgia, South Carolina and Tennessee. Kinder Morgan will continue to operate the system.
Inclusive of existing SNG debt, SNG's total enterprise value is about $4.15 billion, according to the release.
The JV agreement also commits the companies to cooperatively pursue specific growth opportunities to develop natural gas infrastructure.
The companies expect to complete the transaction in the third quarter or early in fourth-quarter 2016. The deal is subject to the notification and clearance and reporting requirements under the Hart-Scott-Rodino Antitrust Improvements Act.
Jones Day, Gibson Dunn & Crutcher LLP, Troutman Sanders LLP and Balch & Bingham LLP are Southern's legal counsel. Bracewell LLP and Weil, Gotshal & Manges LLP are legal counsel to Kinder Morgan.
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