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Energy Transfer to combine with SemGroup in USD 5bn+ deal
Posted on Monday, 16 September 2019 13:13
Energy Transfer has agreed to take SemGroup private in a deal worth USD 5.10 billion, including the assumption of debt and other liabilities.

The transaction will be a 40:60 cash and equity split of USD 6.80 and 0.73 shares in the acquiror for every single item of stock held in the target.

As a result, SemGroup is valued at USD 17.00 per scrip, representing a premium of 65.4 per cent to its close of USD 10.28 on 13th September 2019, when the group had a market capitalisation of USD 818.10 million.

Closing remains subject to shareholder and regulatory approvals and is expected in late 2019 or early 2020.

Following completion, current investors in SemGroup’s stock will own about 2.2 per cent of Energy Transfer’s outstanding common units.

The acquiror is expecting the acquisition to increase its scale across multiple regions and provide further connectivity for its crude oil and natural gas liquids businesses.

Energy Transfer believes the addition of SemGroup strengthens its transportation, terminalling and export capabilities with the addition of the Houston Fuel Oil Terminal located on the Houston Ship Channel with 18.20 million barrels of crude oil storage capacity, five deep-water ship docks and seven barge docks.

The combined company is expected to generate over USD 170.00 million of annual run-rate savings, consisting of commercial and operational synergies of USD 80.00 million, financial dilution of USD 50.00 million and USD 40.00 million less in costs.

Carlin Conner, chief executive of the target, said: “This strategically and financially compelling combination will result in SemGroup joining one of the largest midstream energy companies in the country, with a strong footprint in all major US production basins.

“The combined entity’s size, scale and financial profile will ensure that SemGroup’s assets, including our Gulf Coast terminal, mid-continent footprint and our Canadian joint venture SemCAMS Midstream, benefit from significant growth well into the future.”

In the six months to 30th June 2019, the target generated revenue of USD 1.24 billion, a slight decrease from USD 1.26 billion in the corresponding period of 2018.

Consolidated adjusted earnings before interest, taxes, depreciation and amortisation totalled USD 208.48 million in H1 2019 (H1 2018: USD 192.38 million)

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