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Magellan Midstream Partners to be acquired by fellow Oklahoma company in $18.8B deal

May 15, 2023

Tulsa, Oklahoma-based Magellan Midstream Partners LP (NYSE: MMP), a master limited partnership with significant operations in the Houston area, is being acquired in a deal worth approximately $18.8 billion, including assumed debt.

Oneok Inc. (NYSE: OKE), also based in Tulsa, will pay $25 in cash and 0.6670 shares of its common stock for each outstanding Magellan common unit, for a combined value of about $67.50 per unit, the companies said the evening of May 14. That's a 22% premium to Magellan's May 12 closing price of $55.41 per unit. As of about 7:30 a.m. Central Time on May 15, Magellan's stock had shot up 15.5% to $64 per unit in pre-market trading.

The deal is expected to close in the third quarter of 2023, and the combined company will have a total enterprise value of $60 billion. Pierce H. Norton II will retain his role as CEO of the combined company, which is expected to add a director or two from the board of Magellan's general partner to the Oneok board of directors.

Within two to four years, the combined company is expected to generate total transaction synergies of more than $400 million. That's thanks to the combined company's liquid-focused portfolio and its potential to enhance customer product offerings and increase international export opportunities. The combined company will own more than 25,000 miles of liquids-oriented pipelines, with significant assets and operational expertise at the Gulf Coast and Mid-Continent market hubs.

Among the assets Magellan is adding to the combined company are its East Houston terminal and crude oil trading hub, facilities in Galena Park and Seabrook, and a terminal in Pasadena.

"Our expanded products platform will present further opportunities in our core businesses as well as enhance our ability to participate in the ongoing energy transformation with an increased presence in sustainable fuel and hydrogen corridors," Norton said in a statement.

Goldman Sachs & Co. LLC is serving as lead financial adviser to Oneok, and Goldman Sachs Bank USA is providing fully committed bridge financing. BofA Securities and TPH&Co., the energy business of Perella Weinberg Partners, also advised Oneok. Kirkland & Ellis LLP is serving as Oneok's legal adviser. Morgan Stanley & Co. LLC is serving as financial adviser to Magellan. Latham & Watkins LLP and Richards, Layton & Finger PA are acting as Magellan's legal advisers

By Olivia Pulsinelli, Houston Business Journal