Last month Tulsa, Oklahoma-based ONEOK said it had completed the acquisition of 43 percent of EnLink’s common shares — thereby the controlling stake — held by GIP. Sunday’s definitive merger agreement with EnLink will see ONEOK redeem the remaining publicly held units.
“Under the agreement, each outstanding common unit of EnLink that ONEOK does not already own will be converted into 0.1412 shares of ONEOK common stock”, ONEOK said in a statement online. “The exchange ratio was derived by dividing $15.75 per unit, equal to EnLink's market close price on Nov. 22, 2024, by ONEOK's 10-day volume-weighted average price”.
In total ONEOK expects to issue about 37 million shares, which represent around six percent of its total outstanding shares and amount to $4.3 billion. ONEOK trades on the New York Stock Exchange.
Expected to conclude in the first quarter of 2025, the transaction is subject to customary closing conditions including approval by a majority of holders of outstanding EnLink common shares, ONEOK said.
However, the merger agreement is considered to have already passed regulatory anti-trust clearance. ONEOK said “no further regulatory approval is necessary, as ONEOK filed under the Hart-Scott-Rodino Act in connection with its previously announced acquisition of the controlling interest in EnLink [from GIP], and the necessary waiting period, including for this transaction, has been completed”.
Pierce H. Norton II, ONEOK president and chief executive, said, "This tax-free transaction to acquire the remaining outstanding EnLink units is expected to be accretive to ONEOK shareholders and provide EnLink unitholders with significantly greater trading liquidity and an attractive dividend yield”.
EnLink adds 1.7 billion cubic feet a day (Bcfd) of Permian natural gas processing capacity and 1.6 million barrels per day (MMbd) of Permian crude oil gathering capacity to ONEOK’s portfolio, the new owner said August 28 announcing two acquisition agreements with GIP. ONEOK acquired GIP’s stake for a total cash consideration of approximately $3.3 billion.
The other agreement with GIP, now under BlackRock Inc., also transferred Medallion Midstream LLC to ONEOK for $2.6 billion. Medallion’s assets include over 1,200 miles of petroleum gathering pipelines that provide about 1.3 MMbd of capacity and about 1.5 million barrels of crude oil storage in the Permian Basin.
ONEOK later agreed to sell three natural gas pipelines with an aggregate capacity of 3.7 Bcfd to DT Midstream Inc. for $1.2 billion.
Expected to close by yearend or early 2025, the transaction involves 1,300 miles of pipelines straddling seven states “in the attractive Midwest market region which is expected to experience continued growth in power demand”, Detroit, Michigan-based DT Midstream said in a statement November 19.
The cash transaction, which involves no assumed debt, consists of Guardian Pipeline LLC, Midwestern Gas Transmission Co. and Viking Gas Transmission Co. — all regulated by the Federal Energy Regulatory Commission. Workers will transfer to the new owner.
The transaction is subject to anti-trust reviews by the Justice Department or the Federal Trade Commission.
The divestment to DT Midstream is “expected to enhance ONEOK's financial flexibility and ONEOK's deleveraging trend toward its previously announced target of 3.5 times during 2026”, ONEOK said separately.
“Based on Federal Energy Regulatory Commission filings, the purchase price represents 10.8 times previous 12 months EBITDA as of June 30, 2024”, ONEOK said.
Norton, the ONEOK chief executive, said, "This transaction will align and enhance our capital allocation priorities within our integrated operating footprint”.
