ONEOK has reached an agreement to acquire full ownership of EnLink Midstream, a pipeline transportation company specialising in natural gas, through an all-stock transaction valued at $4.3bn.
The agreement follows ONEOK’s recent acquisition of a 43% stake in EnLink Midstream from Global Infrastructure Partners for approximately $3.3bn. At that time, ONEOK revealed its intention to seek the purchase of EnLink Midstream’s publicly traded common units in a tax-free transaction.
EnLink Midstream delivers energy infrastructure solutions, including the gathering, transportation, processing, and storage of natural gas, crude oil, and natural gas liquids (NGLs), along with CO₂ transportation for carbon capture. Its operations span key regions like the Permian Basin, Louisiana, Oklahoma, and North Texas.
Under the new deal, outstanding EnLink common units not already owned by ONEOK will be exchanged for 0.1412 shares of the latter’s common stock. This exchange ratio was calculated by dividing $15.75 per unit, which is EnLink’s closing market price on 22 November 2024, by the 10-day volume-weighted average price (VWAP) of ONEOK.
ONEOK president and CEO Pierce Norton II said: “This tax-free transaction to acquire the remaining outstanding EnLink units is expected to be accretive to ONEOK shareholders and provide EnLink unitholders with significantly greater trading liquidity and an attractive dividend yield.
“ONEOK has a longstanding reputation as being intentional in building a premier energy infrastructure company. This next step further solidifies that status, allowing us to continue expanding and extending our value chain, while creating value for our stakeholders.”
As part of the transaction, ONEOK will issue approximately 37 million shares, representing about 6% of the company’s total outstanding shares upon closing.
Both ONEOK and EnLink Midstream are listed on the New York Stock Exchange (NYSE).
EnLink Midstream’s board of directors assigned transaction review and approval to a conflicts committee, comprising three independent directors.
After consulting its independent legal and financial advisers, the committee unanimously determined that the agreement aligns with the best interests of both the company and its public unitholders.
The committee’s recommendation was subsequently approved by the board.
The transaction is expected to close in Q1 2025, pending customary regulatory approvals and the satisfaction of other conditions. It will also require the approval of a majority of EnLink Midstream’s outstanding common units, including those held by ONEOK.
ONEOK has pledged to vote its 44% ownership stake in favour of the merger.
Goldman Sachs & Co. is acting as ONEOK’s lead financial adviser, with Barclays and Citi also providing advisory services. Kirkland & Ellis is serving as ONEOK’s legal counsel.
