US-based gas pipeline operator DT Midstream has agreed to buy an additional 26.25% stake in Millennium Pipeline for a total cash consideration of around $552m.
Under the terms of the agreement, DT Midstream will obtain National Grid’s entire ownership interest in Millennium Pipeline, upon closing.
The transaction brings the company’s total stake in Millennium Pipeline to 52.50%.
The transaction, which has been approved by DT Midstream’s board of directors, is expected to be completed in the fourth quarter of 2022.
Its closing is subject to certain customary closing conditions, including regulatory approvals, and termination of the waiting period under the Hart-Scott-Rodino Act.
DT Midstream intends to finance the transaction with available cash flow and capacity under its revolving credit facility.
DT Midstream president and CEO David Slater said: “Increasing our ownership in a premium integrated asset like Millennium Pipeline directly aligns with our strategic investment thesis and accelerates our growth plan.
“This transaction also increases the revenue contribution from our pipeline segment, underpinned by take-or-pay contracts with high credit quality customers.”
DT Midstream said that the additional stake in Millennium Pipeline aligns with the company’s strategy of owning pure-play natural gas assets in premier basins and market regions.
Millennium is a 263-mile (423km) interstate pipeline, which delivers Northeast Marcellus and Utica gas to utility and power plant markets across New York State and New England.
DT Midstream was one of the founding developers and an existing equity owner in Millennium Pipeline, which has been operating since 2008.
Millennium is interconnected with the company’s fully owned Bluestone Gathering Lateral Pipeline which has upstream connections to its Susquehanna Gathering System.
Lazard serves as financial advisor and Shearman & Sterling is serving as legal counsel to DT Midstream.
DT Midstream executive vice president and CFO Jeff Jewell said: “This transaction will be immediately value accretive and, given the strength of our balance sheet, will be fully funded with cash on hand and available credit capacity.”
DT Midstream owns, operates, and develops natural gas interstate and intrastate pipelines, storage and gathering systems, compression, treatment, and surface facilities.
The company is engaged in transporting clean natural gas for utilities, power plants, marketers, large industries and energy producers across the US and Canada.
