8-K: ONEOK to Acquire Remaining EnLink Midstream Units in $4.3 Billion Stock Deal

ONEOK will acquire all outstanding publicly held common units of EnLink Midstream for $4.3 billion in ONEOK common stock, with each EnLink unit converting into 0.1412 shares of ONEOK stock.

Summary

• ONEOK, Inc. and EnLink Midstream, LLC have entered into a definitive merger agreement.
• ONEOK will acquire all outstanding publicly held common units of EnLink for $4.3 billion in ONEOK common stock.
• Each outstanding EnLink common unit will be converted into 0.1412 shares of ONEOK common stock.
• The exchange ratio was determined by dividing EnLink's closing price on November 22, 2024 ($15.75) by ONEOK's 10-day volume-weighted average price.
• ONEOK will issue approximately 37.0 million shares, representing about 6.0% of total outstanding shares post-transaction.
• The EnLink Conflicts Committee and Board of Directors have unanimously approved the transaction.
• The transaction is expected to close in the first quarter of 2025, subject to customary closing conditions and unitholder approval.
• ONEOK has committed to vote its 44% stake in favor of the transaction.
• No ONEOK shareholder vote is required.
• No further regulatory approval is necessary.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment, highlighting the strategic benefits of the acquisition, the expected accretion to shareholders, and the unanimous approval from the EnLink Conflicts Committee and Board. The language used is optimistic and forward-looking, suggesting confidence in the success of the transaction.

Positives

• The transaction is expected to be accretive to ONEOK shareholders.
• EnLink unitholders will receive greater trading liquidity and an attractive dividend yield.
• The transaction is tax-free.
• The merger will further solidify ONEOK's position as a premier energy infrastructure company.
• The transaction allows ONEOK to expand and extend its value chain.

Risks

• The transaction is subject to customary closing conditions and unitholder approval.
• There is a risk that ONEOK will not be able to successfully integrate EnLink's business.
• Cost savings, synergies, and growth from the transaction may not be fully realized or may take longer than expected.
• Credit ratings following the transaction may be different from what ONEOK expects.
• There is a risk of potential adverse reactions or changes to business or employee relationships.
• The transaction could distract management teams from ongoing business operations or cause substantial costs.
• Changes in ONEOK's capital structure could have adverse effects on the market value of its securities.
• There are risks related to the ability of the parties to retain customers and key personnel.
• The transaction is subject to the risk of changes in governmental regulations or enforcement practices.
• The transaction is subject to the risk of any economic downturn and any substantial decline in commodity prices.

Future Outlook

The transaction is expected to close in the first quarter of 2025, subject to customary closing conditions and unitholder approval. The transaction is expected to be accretive to ONEOK shareholders and provide EnLink unitholders with significantly greater trading liquidity and an attractive dividend yield.

Management Comments

• Pierce H. Norton II, ONEOK president and chief executive officer, stated that the transaction is expected to be accretive to ONEOK shareholders and provide EnLink unitholders with significantly greater trading liquidity and an attractive dividend yield.
• Pierce H. Norton II also mentioned that this next step further solidifies ONEOK's status, allowing them to continue expanding and extending their value chain, while creating value for their stakeholders.

Industry Context

This acquisition is part of a broader trend of consolidation in the midstream energy sector, as companies seek to expand their operations and achieve greater economies of scale. ONEOK's acquisition of the remaining EnLink units follows its recent acquisition of GIP's interest in EnLink, indicating a strategic move to fully integrate EnLink into its operations.

Comparison to Industry Standards

• The transaction structure, using a stock-for-unit exchange, is a common approach in the midstream sector for mergers and acquisitions.
• The exchange ratio of 0.1412 shares of ONEOK stock for each EnLink unit is within the typical range for such transactions, reflecting a premium over the market price of EnLink units.
• The transaction is similar to other recent midstream consolidation deals, such as the acquisition of Crestwood Equity Partners by Energy Transfer, where the acquiring company seeks to simplify its structure and enhance its operational footprint.
• The expected accretion to ONEOK shareholders is a common goal in such transactions, aiming to improve earnings per share and overall shareholder value.
• The focus on providing EnLink unitholders with greater trading liquidity and an attractive dividend yield is also a typical consideration in these types of deals, aiming to ensure a smooth transition for the acquired company's investors.

Stakeholder Impact

• Shareholders of ONEOK are expected to benefit from the accretive nature of the transaction.
• Unitholders of EnLink are expected to receive greater trading liquidity and an attractive dividend yield.
• Employees of both companies will be integrated into a single entity.
• Customers and suppliers of both companies will be part of a larger, more diversified organization.

Next Steps

• The Company will file a proxy statement with the SEC.
• The Company will hold a special meeting of the Company Unitholders to vote on the merger agreement.
• ONEOK will file a registration statement on Form S-4 with the SEC.
• The parties will work to satisfy all closing conditions.
• The transaction is expected to close in the first quarter of 2025.

Key Dates

Keywords

ONEOK, EnLink Midstream, merger, acquisition, common units, stock, midstream, energy infrastructure, tax-free, shareholders