- 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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