ONEOK Buys Magellan Midstream Plan For $19B To Boost Offering

ONEOK Inc OKE penned a merger deal Magellan Midstream Partners LP MMP valued at around $18.8 billion, including assumed debt.
The deal comprises a payment of $25.00 in cash and 0.6670 shares of ONEOK common stock to each MMP unitholder, representing a current implied value of $67.50 per unit and a 22% premium to MMP's closing price on May 12, 2023.
The combined company, with an enterprise value of $60.0 billion, will be one of the U.S.' leading oil and natural gas pipeline operators, having a portfolio of over 25,000 miles of liquids-oriented pipelines and a strong presence across the Gulf Coast and Mid-Continent markets.
Post transaction closure expected in Q3 2023, the combined company is projected to garner an average annual amount of around $1.0 billion in the first four years.
ONEOK projects the deal to enhance customer product offerings and provide international export opportunities, with projected total annual transaction synergies from the initiatives of over $400 million in two to four years.
ONEOK expects the deal to be accretive to EPS from 2024, with an accretion of 3% to 7% per year from 2025 through 2027.
The company projects FCF per share accretion averaging over 20% from 2024-2027, with base synergies expected to be at least $200 million annually. ONEOK anticipates a tax benefit of around $3.0 billion from 2024 to 2027 from the merger.
Price Action: OKE shares are trading lower by 5.82% at $60.01 and MMP is up 15% to $64.00 premarket on the last check Monday.

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