Replies to post #11100 on Keeping It Simple

[eastunder]

Buckeye Partners, L.P. Agrees to be Acquired by IFM Investors for $41.50 per common unit

GlobeNewswire•May 10, 2019


IFM Expands Midstream Energy Infrastructure Portfolio with Addition of Buckeye


Transaction valued at $10.3 billion enterprise value and $6.5 billion equity value

HOUSTON and NEW YORK, May 10, 2019 (GLOBE NEWSWIRE) -- IFM Investors and Buckeye Partners, L.P. (NYSE: BPL) today announced a definitive agreement ("Agreement") under which the IFM Global Infrastructure Fund will acquire all of the outstanding public common units of Buckeye for $41.50 per common unit. The all-cash transaction is valued at $10.3 billion enterprise value and $6.5 billion equity value. The acquisition price represents a 27.5% premium to Buckeye’s closing unit price on May 9, 2019 and a 31.9% premium to Buckeye’s volume-weighted average unit price since November 1, 2018, which is the last trading day prior to Buckeye’s announcement of certain strategic actions. Buckeye’s Board of Directors unanimously approved the proposed transaction with IFM. The closing of the merger will be subject to approval of a majority of the Buckeye unitholders, certain regulatory approvals and other customary closing conditions.

[eastunder]

BPL

The skinny

Australia-based IFM Investors, a global institutional funds manager, plans to acquire Houston-based master limited partnership Buckeye Partners LP (NYSE: BPL). The deal’s equity value is $6.5 billion, and its enterprise value is $10.3 billion. The deal is expected to herald similar MLP buyouts, analysts said.

The details

IFM Global Infrastructure Fund will acquire Buckeye for $41.50 per common unit, according to a May 10 press release. That represents a 27.5 percent premium to Buckeye’s closing unit price on May 9. The deal is expected to close in the fourth quarter of 2019 and is subject to Buckeye unitholders’ approval.

After the deal closes, Buckeye will retain its name and continue to operate its business as usual, according to a letter to employees filed with the U.S. Securities and Exchange Commission. No changes are expected for Buckeye's leadership, operational footprint, facilities or workforce, and the company’s compensation programs will be comparable to its existing ones, according to other SEC filings. There is no go-shop period in which Buckeye could seek out competing bids, Clark Smith, chairman, president and CEO of Buckeye, said on a conference call with investors.

The assets

Buckeye is one of the most prominent midstream companies in the downstream energy space. The company’s assets include 6,000 miles of pipeline with over 100 delivery locations and 115 liquid petroleum products terminals with aggregate tank capacity of over 118 million barrels, per the release. Its marine terminals are located mainly along the East Coast and Gulf Coast as well as in the Caribbean.


The buyer

IFM has $90 billion of assets under management, including $39.1 billion in infrastructure, per the release. The firm targets core infrastructure in developed markets with no predetermined timeline for exiting the investments. It currently has interests in 32 investments across North America, Australia and Europe. Its North American asset portfolio includes Colonial Pipeline, Freeport LNG, Global Container Terminals and the Indiana Toll Road.

The backstory

The purchase price of $41.50 per common unit also represents a 31.9 percent premium to the company’s volume-weighted average unit price since Nov. 1. That time period is significant because Buckeye announced on Nov. 2 that it had completed the strategic review it launched in August. In an effort to maintain its credit rating, increase financial flexibility and reallocate capital to assets with higher-return growth opportunities, Buckeye decided to sell its stake in a joint venture for $975 million, sell a package of nonintegrated domestic pipeline and terminal assets for $450 million and reduce its quarterly cash distribution.

The back, backstory

Buckeye was a private company for most of its 133 years in business, Smith noted in a message to employees. The company’s initial public offering was in December 1986.

The players

Evercore Group LLC is acting as lead financial adviser to IFM, and Credit Suisse, Goldman, Sachs & Co. LLC and Bank of America Merrill Lynch are acting as financial advisers to IFM. White & Case LLP and Baker Botts LLP are acting as legal advisers to IFM. Intrepid Partners LLC and Wells Fargo Securities LLC are acting as financial advisers to Buckeye, and Cravath, Swaine & Moore LLP is acting as Buckeye's legal adviser