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IFM to acquire Buckeye for USD 10.3bn
Posted on Monday, 13 May 2019 13:30
IFM Investors, via IFM Global Infrastructure Fund, has reached an agreement to acquire owner and operator of oil pipelines and terminals Buckeye Partners for USD 10.30 billion.

The Australian acquiror is offering USD 41.50 per item of stock held, representing a premium of 27.5 per cent to the target’s close of USD 32.55 on 9th May, the last trading day prior to the announcement.

Following the agreement, shares in Buckeye closed up to USD 41.75 on 10th May, giving the group a market capitalisation of USD 6.40 billion.

According to Zephyr, the M&A database published by Bureau van Dijk, the transaction represents the largest of a pipeline transportation company to be announced globally in the last 12 months.

The deal, which values the business at around USD 6.50 billion and includes the group’s USD 4.39 billion in total liabilities, has already been approved by Buckeye’s board of directors and remains subject to the green light from shareholders and regulators.

Based in Houston, the company owns and operates one of the largest diversified networks of integrated midstream assets, including 6,000 miles of oil and natural gas transportation capacity, over 100 delivery locations and 115 liquid petroleum products terminals with a maximum tank that can hold 118.00 million barrels.

Clarke Smith, chairman of the company, said: “The proposed transaction will provide immediate and enhanced value for our unitholders with an attractive premium that accelerates long-term returns and represents the underlying value of our business.

“In addition, the proposed transaction will provide Buckeye with superior access to capital to execute on its long-term business strategy.”

The company posted total revenue of USD 1.03 billion in the three months ended 31st March 2019, down 12.7 per cent from USD 1.18 billion in the corresponding period of 2018.

Net income totalled USD 81.26 million in the first quarter of 2019, compared to USD 117.09 million in Q1 2018.

Bloomberg cited Hinds Howard, a portfolio manager at CBRE Calrion Securities, as saying this transaction represents the first full takeover of a pipeline master limited partnership during a wave of private equity investments into the sector.

Zephyr shows that 138 deals have targeted the global pipeline transportation sector over the last 12 months, with this acquisition being the largest.

Antero Midstream acquired Antero Midstream Partners for USD 7.20 billion in March in the second-biggest transaction.

© Zephus Ltd