Targa to Buy Two Atlas Partnerships for $7.7 Billion

By Tina Davis  

Targa Resources Partners LP (TRGP) and Targa Resources Corp. agreed to buy Atlas Pipeline Partners LP (APL) and Atlas Energy LP (ATLS) for a total of about $7.7 billion, including debt, the latest combination in the complicated world of energy infrastructure partnerships.
Holders of Atlas Pipeline will receive $1.26 in cash and 0.5846 units of Targa Resources Partners for each unit they own, a value of $38.66 based on the Oct. 10 closing price, Houston-based Targa said in a statement today. The $5.8 billion transaction, including $1.8 billion in assumed debt, represents a 15 percent premium for Atlas Pipeline holders.
As part of the deal, Atlas Energy will spin off some assets before it’s acquired by Targa Resources for $1.87 billion. The Atlas Energy transaction consists of $610 million in cash and 10.35 million shares in Targa Resources.
The deal helps Targa expand its market for processing and exporting natural gas liquids. The transactions are among more than
a dozen pipeline deals announced this year amid consolidation of an industry that’s dominated by tax-advantaged master-limited partnerships and often complex corporate structures. The combined company would have a presence in the Permian Basin, Eagle Ford and Bakken formations, where hydraulic fracturing and horizontal wells have unlocked huge oil and natural gas resources.
“With improved size and scale, the pro-forma business will be able to fund a combined multiyear, multibillion-dollar backlog of high returning organic projects utilizing a significantly lower cost of capital,” Eugene Dubay, chief executive officer of Philadelphia-based Atlas, said in a separate statement.

Targa Takeover

Targa was in talks this year to be bought by Kelcy Warren’s Energy Transfer Equity LP at a price of more than $15 billion, two people with knowledge of the matter said in June. Those negotiations ended without an agreement.
Kinder Morgan Inc. announced plans to simplify its structure in August with a series of transactions to acquire associated pipeline limited partnerships for $44 billion.
Citigroup Inc. advised Atlas and Stifel, Nicolaus & Co. advised its special conflicts committee. Evercore Partners Inc. advised Targa Resources Partners and Wells Fargo & Co. advised Targa Resources Corp.