The company will also acquire the remaining 14% interest in the Colorado Interstate Gas Company, a majority owned subsidiary of El Paso Corporation.
The two transactions will be completed for a remuneration of $635m and the assumption of around $242m of proportional debt.
The terms of the deal were approved by the board of the general partner, El Paso Pipeline GP Company, and the board’s conflicts committee which is comprised of independent directors.
El Paso will close the deal around the same time Kinder Morgan acquires El Paso Corporation and the transaction is expected to be immediately accretive to distributable cash flow.
The transaction is being funded by about $571m in cash from borrowings under revolving credit facility and $64m from the issuance of common units to El Paso Corporation.
El Paso Corporation will contribute around $1m general partner capital to maintain its 2% general partner interest in El Paso Pipeline Partners.
Tudor, Pickering, Holt & Co. acted as the independent financial advisor on the behest of the conflicts committee.
