ONEOK Spends $3B On EnLink Midstream Stake, $2.6B On Medallion

EnLink Midstream ENLC shares are trading higher premarket Thursday after ONEOK, Inc. OKE agreed to acquire Global Infrastructure Partners‘ (GIP) 43% stake in the company for $3 billion, or $14.90 per unit.

The per unit price represents a 12.8% premium over EnLink’s closing market price as of Aug. 27, 2024.

The deal also includes 100% of the managing member’s interests for $300 million. This brings the total cash consideration to approximately $3.3 billion.

Separately, ONEOK will also acquire all equity interests in Medallion Midstream, LLC, for $2.6 billion in cash.

This acquisition, representing about 6.3 times the estimated 2025 EBITDA. It includes base case synergies, and pertains to Medallion’s extensive crude gathering and transportation system in the Permian’s Midland Basin.

The total transactions are valued at $5.9 billion.

The deals add 1.7 billion cubic feet per day to ONEOK’s Permian gas processing capacity and 1.6 million barrels per day of Permian crude gathering capacity.

ONEOK plans to leverage its expanded platforms to enhance service offerings for producers in the Permian Basin.

The transactions are not cross-conditioned and are anticipated to close early in the fourth quarter of 2024.

Synergies: The transactions are expected to support ONEOK’s $2 billion share repurchase program.

Following these deals, ONEOK expects to achieve annual synergies of $250 million to $450 million within three years.

Following the transaction with GIP, EnLink will become a consolidated subsidiary of ONEOK for GAAP financial reporting.

Investors can gain exposure to ENLC via Global X MLP ETF MLPA and Alerian MLP ETF AMLP.

Price Action: ENLC shares are up 13.22% at $14.90 premarket at the last check Thursday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.