425: ONEOK to Acquire Remaining EnLink Midstream Units in $4.3 Billion Stock Deal

ONEOK, Inc. has announced a definitive agreement to acquire all outstanding publicly held common units of EnLink Midstream, LLC for $4.3 billion in ONEOK common stock.

Summary

• ONEOK, Inc. will acquire all outstanding publicly held common units of EnLink Midstream, LLC 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 approval by a majority of EnLink common unitholders.
• ONEOK has committed to vote its 44% stake in favor of the transaction.
• No ONEOK shareholder vote is required.
• The transaction is expected to be tax-free and accretive to ONEOK shareholders.
• ONEOK completed its acquisition of Global Infrastructure Partners' interest in EnLink on October 15, 2024, for approximately $3.3 billion.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment, highlighting the strategic benefits of the acquisition, the unanimous approval by relevant committees, and the expected financial gains. 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 significantly greater trading liquidity and an attractive dividend yield.
• The transaction is tax-free.
• The EnLink Conflicts Committee and Board of Directors have unanimously approved the transaction.
• No ONEOK shareholder vote is required.

Risks

• The transaction is subject to customary closing conditions and approval by a majority of EnLink common unitholders.
• 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 ONEOK's and EnLink's management teams from ongoing business operations.
• There is a 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 approval by a majority of EnLink common unitholders. 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.
• Norton also mentioned that this next step further solidifies ONEOK's status as a premier energy infrastructure company, 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 move to acquire the remaining stake in EnLink follows its previous acquisition of GIP's interest, indicating a strategic focus on integrating and controlling key assets in its value chain.

Comparison to Industry Standards

• The transaction structure, involving a stock-for-unit exchange, is a common approach in the midstream sector for consolidating ownership of publicly traded partnerships.
• The exchange ratio is based on a recent market price of EnLink and a 10-day volume-weighted average price of ONEOK, which is a standard method for determining fair value in such transactions.
• The transaction is expected to be tax-free, which is a typical feature of mergers and acquisitions in the energy sector, designed to minimize tax liabilities for both companies and their investors.
• The deal is similar to other recent acquisitions in the midstream space, such as the consolidation of Energy Transfer Partners and Sunoco Logistics Partners, where the parent company acquired the remaining publicly held units of its subsidiary.
• The expected accretion to ONEOK shareholders is a common goal in such transactions, as companies aim to enhance their financial performance and shareholder value through strategic acquisitions.

Stakeholder Impact

• EnLink unitholders will receive ONEOK stock, providing them with greater trading liquidity and an attractive dividend yield.
• ONEOK shareholders are expected to benefit from the accretive nature of the transaction.
• 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 companies will work to obtain the necessary approval from EnLink unitholders.
• ONEOK will file a registration statement on Form S-4 with the SEC.
• The companies will work to satisfy customary closing conditions.
• The transaction is expected to close in the first quarter of 2025.

Key Dates

Keywords

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