Kinder Morgan Gets Shareholder Approval for Pipeline Merger - Analyst Blog

Houston, TX-based oil and gas pipeline company, Kinder Morgan, Inc. (KMI) announced that it got shareholder approval for its $70 billion mega-deal to consolidate its four related pipeline entities into one. The intended acquisition, first announced by Kinder Morgan on Aug 10, 2014, also entails the purchase of all the outstanding equity securities of its three subsidiaries – Kinder Morgan Energy Partners, L.P. (KMP), Kinder Morgan Management, LLC (KMR) and El Paso Pipeline Partners, L.P (EPB).
 
Unitholders and shareholders at special meetings held by the parent company and the three partnerships, overwhelmingly approved all proposals related to the merger. In all the four special meetings, more than 95% of the votes cast were in favor of the merger transactions.

The combined entity, once operational, will represent the largest energy infrastructure company in North America and the third-largest energy company globally. The new company is estimated to have an enterprise value of about $140 billion. The transaction is expected to close on Nov 26, 2014.

Further, the acquisition will simplify the structure of the Kinder Morgan group of companies, benefiting all shareholders and unitholders. Kinder Morgan is projected to return a dividend of $2.00 per share in 2015, up 16% from the estimated $1.72 in 2014. Management expects the dividend to increase by about 10% each year from 2015 through 2020. Over the same period, excess coverage is anticipated to exceed $2 billion.

The transaction will provide KMI shareholders with significant tax benefits from the depreciation deductions related to the upfront purchase and future capital expenditures.

Additionally, the company will have a leading position in each of its business segments, and operate in the swiftly growing North American energy infrastructure sector. The company operates approximately 80,000 miles of pipelines transmitting natural gas, refined petroleum products, crude oil, carbon dioxide and additional products. It has more than 180 terminals that store petroleum products and chemicals, along with ethanol, coal, petroleum coke and steel.  

Currently, Kinder Morgan carries a Zacks Rank #3 (Hold).
 

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KINDER MORG ENG (KMP): Free Stock Analysis Report
 
EL PASO PIPELIN (EPB): Free Stock Analysis Report
 
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KINDER MORG MGT (KMR): Free Stock Analysis Report
 
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