If the deal is ultimately approved, the two companies would have an enterprise value of $60 billion when combined, representing one of the U.S.’s largest oil and natural gas pipeline operators.
The idea behind the deal was to bring together “two premier energy infrastructure businesses with strong returns on invested capital and diverse free cash flow generation,” two companies said in a press release.
ONEOK said it will pay $25 in cash, in addition to 0.6670 shares of ONEOK common stock for each outstanding Magellan common unit.
"ONEOK has a long history and track record of being at the forefront of transformational transactions," said Pierce H. Norton II, ONEOK president and chief executive officer.
“The combination of ONEOK and Magellan will create a diversified North American midstream infrastructure company with predominately fee-based earnings, a strong balance sheet and significant financial flexibility focused on delivering essential energy products and services to our customers and continued strong returns to investors.”
The deal is based on a 22% premium based on Magellan’s May 12 closing price. Magellan shareholders, including Congressman Kevin Hern, are already witnessing the benefits of a deal as MMP shares trade over 15% higher on Monday.
Based on Monday’s trading price, the stock is up nearly 25% from the levels seen earlier this year.