US-based petroleum refiner Phillips 66 has made a non-binding proposal to acquire the public units of the pipeline operator DCP Midstream.
The company is proposing to purchase the outstanding common shares of DCP Midstream at a price of $34.75 per share, subject to negotiation and execution of a definitive agreement.
The transaction would value the pipeline operator at around $7.2bn, reported Reuters.
It will be structured as a merger of DCP Midstream with an indirect subsidiary of Phillips 66, with DCP Midstream as the surviving entity.
The closing of the transaction is subject to customary closing conditions, including approval of the definitive agreement by the board of directors of DCP Midstream and a conflicts committee.
Phillips 66 president and CEO Mark Lashier said: “We are growing our integrated NGL business to further strengthen our competitive position, while driving operational and commercial synergies.
“DCP is a valued business in our portfolio and enhances our existing value chain from wellhead to market, creating a platform for future NGL growth.
“Our focus remains on operating excellence and disciplined capital allocation to create sustainable value for our shareholders.”
Phillips 66 said that the proposal is in line with its strategy for realignment of interests in DCP Midstream and Gray Oak Pipeline, through the merger of existing joint ventures owned by Enbridge.
The company will increase its interest in DCP Midstream from 28.26% to 43.31% and will manage the joint venture’s interest in the pipeline operator, and pay around $400m of cash.
In addition, Phillips 66 will reduce its stake in Gray Oak Pipeline from 42.25% to 6.50%, while Enbridge will manage the joint venture’s interest in Gray Oak Pipeline.
BofA Securities served as an exclusive financial advisor, Barclay’s Capital as financial advisor and Bracewell as legal counsel, and Gibson Dunn & Crutcher as special tax counsel to Phillips 66 on the transaction.
Phillips 66 is engaged in manufacturing, transporting and marketing products. Its diversified portfolio includes midstream, chemicals, refining, marketing and specialities businesses.
