Dallas-based Energy Transfer Partners announced Monday that it would buy its sister company Regency Energy Partners for $11.2 billion, including nearly $6.8 billion in debt, according to FuelFix. The purchase will make Energy Transfer Partners the second largest master limited partnership (MLP), the company said.
CEO of Regency Mike Bradley said in a statement:
“In light of the current volatility in commodity prices and the changes in the capital markets, it became apparent over the last several months that Regency needed more scale and diversification, along with an investment grade balance sheet, to continue its growth.”
The potential deal would be a cash-and-stock deal, with both companies being controlled by parent company Energy Transfer Equity, L.P. Unitholders of Regency will receive 0.4066 Energy Transfer Partners common units and a cash payment of $.032 for a total price of $26.89 per unit, based on Energy Transfer Partners’ closing price on January 23. The price is a 15 percent premium to the average price of Regency’s common units for the past three trading days ending January 23, the company said. The deal will also restructure the amount of cash Energy Transfer partners is required to pass along to its parent company, Energy Transfer equity, by a total of $320 million over a five-year period.
Energy Transfer owns and operates approximately 71,000 miles of pipelines, which is combined across several companies.