On October 16, 2011, Kinder Morgan, Inc. (“Kinder Morgan”) and El Paso Corporation (“El Paso”) announced that Kinder Morgan will be buying El Paso for approximately $38 billion (including outstand debt), creating the largest natural gas pipeline and storage company in the country. The combined company will own an estimated 80,000 miles of natural gas pipeline, and will become the fourth largest energy company worth approximately $94 billion. The new company will also become the largest domestic independent petroleum transporter, the largest American CO2 transporter, the second largest oil producer in Texas, the biggest independent terminal/operator in the nation, and the only oil and gas pipeline to the West Coast.
The merger will be required to be approved by both El Paso and Kinder Morgan shareholders, and that vote is expected to take place at a special meeting in January 2012. The merger must also pass all regulatory approvals, but Kinder Morgan has already agreed to pay $26.87 per share to El Paso. That price represents a 47 percent premium over the 20-day average closing price as of October 14. El Paso has agreed to not solicit competing transactions and to pay a $650 million termination fee. Once the merger is complete, El Paso will become a subsidiary, but Kinder Morgan intends to sell El Paso’s exploration and production assets. Richard Kinder will remain the CEO and Chairman for Kinder Morgan, and two El Paso members will join the Kinder Morgan Board of Directors.
A link to the press release on the merger is available here.