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

ONEOK, Inc. has agreed 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 remaining publicly held common units of EnLink Midstream, LLC for $4.3 billion in ONEOK stock.
• Each outstanding EnLink common unit will be converted into 0.1412 shares of ONEOK common stock.
• The exchange ratio was determined using EnLink's closing price on November 22, 2024, and 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 unanimously approved the merger.
• The transaction is expected to close in the first quarter of 2025, pending EnLink unitholder approval and other customary conditions.
• ONEOK, which already owns approximately 44% of EnLink's common units, has committed to voting in favor of the transaction.
• The acquisition is structured as a tax-free transaction and is expected to be accretive to ONEOK shareholders.
• No additional regulatory approvals are required due to previous filings related to ONEOK's acquisition of a controlling interest in EnLink.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook on the merger, highlighting its strategic benefits and expected accretion. While risks are mentioned, the overall tone is optimistic and confident in the transaction's success.

Positives

• The transaction is expected to be accretive to ONEOK shareholders.
• EnLink unitholders will gain significantly greater trading liquidity and an attractive dividend yield.
• The merger will allow ONEOK to expand and extend its value chain.
• The transaction is tax-free.
• No additional regulatory approvals are required.

Negatives

• The transaction is subject to EnLink unitholder approval.
• The integration of EnLink's business may present challenges.
• There is a risk that cost savings and synergies may not be fully realized or may take longer than expected.
• The credit ratings following the transaction may be different from what ONEOK expects.

Risks

• ONEOK may 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 differ from expectations.
• A condition to closing may not be satisfied, or the merger agreement may be terminated.
• EnLink unitholders may not approve the transaction.
• There may be adverse reactions or changes to business or employee relationships.
• Changes in ONEOK's capital structure could negatively impact its market value.
• The transaction could distract management teams from ongoing operations.
• Economic downturns and commodity price declines could impact results.
• Changes in governmental regulations could pose challenges.

Future Outlook

The transaction is expected to be accretive to ONEOK shareholders and provide EnLink unitholders with greater trading liquidity and an attractive dividend yield. The combined entity will continue to expand and extend its value chain.

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 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 infrastructure and create value through synergies and scale. ONEOK's acquisition of the remaining EnLink units follows its previous acquisition of a controlling interest, indicating a strategic move to fully integrate EnLink's assets and 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 is based on market prices, which is a standard practice to ensure fairness to both sets of shareholders.
• The deal is similar to other recent midstream consolidation efforts, such as the merger of Energy Transfer and Enable Midstream, where the goal is to create larger, more efficient entities.
• The expected accretion to ONEOK shareholders is a typical goal in such transactions, aiming to enhance shareholder value.
• The timeline for closing, expected in the first quarter of 2025, is consistent with the typical timeframe for mergers of this size, allowing for regulatory approvals and shareholder votes.

Stakeholder Impact

• ONEOK shareholders are expected to benefit from the accretive nature of the transaction.
• EnLink unitholders will receive ONEOK stock, gaining greater trading liquidity and an attractive dividend yield.
• Employees of both companies will be integrated, with details to be shared through the Integration Hubs.
• Customers and suppliers will see a continuation of services, with the combined entity aiming to expand its value chain.

Next Steps

• EnLink unitholder vote to approve the merger.
• Filing of the Registration Statement with the SEC.
• Mailing of the proxy statement/prospectus to EnLink unitholders.
• Completion of the transaction, expected in the first quarter of 2025.

Key Dates

Keywords

ONEOK, EnLink Midstream, Merger, Acquisition, Midstream, Energy Infrastructure, Common Units, Stock Transaction, Shareholders, Tax-Free