NEW YORK (Bloomberg) – The pipeline unit of refiner Marathon Petroleum Corp. plans to buy MarkWest Energy Partners LP, the second-largest US processor of natural gas, for about $15.8 billion in stock and cash.
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“I’m excited about this deal, “TheStreet’s Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said on CNBC’s ” Mad Dash” segment. There is continued consolidation in the pipeline industry.
MarkWest processes natural gas, including in the Marcellus and Utica shales. Valued at $21 billion this Master Limited Partnership (MLP) is expected to post ‘25% compound annual distribution growth rate, ‘ by the year 2017. (NYSE:WMB) rejected a $64 per share offer from MLP Energy Transfer Equity (NYSE:ETE) for being too low and is looking at alternative buyers.
Mexican construction firm ICA expects to sell assets next year for 5 billion pesos ($318 million) as part of an effort to reduce its heavy debt load, Chief Executive Alonso Quintana said in an interview. The agreement will also include single cash payment to unit holders of MarkWest.
MarkWest unitholders will get 1.09 common units of MPLX and $3.37 in cash for every unit held, the companies said on Monday.
Investors favor tax-advantaged MLPs as they pay out most of their cash flow as dividends.
Findlay, Ohio-based MPLX was created in 2012 by Marathon Petroleum to own and operate pipelines and other so-called midstream assets. Marathon will contribute $675 million to the payout for MarkWest’s shareholders.
MarkWest’s shares were trading at $71.29 before the bell, below the offer price of $78.64.
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Heminger noted that the combination of MarkWest and MPLX eliminates the need for the recently proposed MPLX acquisition of MPC’s marine transportation assets in 2015. Jefferies LLC is MarkWest’s financial adviser and Cravath, Swaine & Moore LLP its legal adviser.
