30 June 2009
Deal in the pipeline: Enterprise deals for rival
Enterprise Products Partners LP will pay $3.3 billion to pick up Teppco Partners LP.
The partnership will own nearly 48,000 miles of crude and natural gas pipelines; 200 million barrels of storage capacity for natural gas liquids, crude, and refined products; and 27 billion cubic feet of natural gas storage capacity.
It also will control one of the largest liquid natural gas terminals in the nation in the Houston Ship Channel.
Teppco rejected a bid for $2.8 billion earlier this year. Enterprise then decided to up the offer.
In a market full of twists and turns lately, the combined company will provide some stability.
“We’re largely a fee-based company,” said an Enterprise and Teppco spokesman. “Whether the price of gasoline is $2 at pump or $4 a pump, we get the same amount of money to ship it.”
In the world of synergy, where these types of deals live, the companies should benefit from $20 million in savings, officials said.
The acquisition “will establish Enterprise as the largest pipeline partnership as measured by miles of pipe, enterprise value, and equity market capitalization,” said Michael A. Creel, Enterprise president and chief executive.
The deal should close by the end of the year.
For related information, go to www.isa.org/productivity.