ONEOK acquires US pipeline player for $18.8 bln

ONEOK has signed a definitive merger agreement with US pipeline operator Magellan Midstream Partners to acquire the entirety of its assets and debt for around USD 18.8 billion, the Tulsa-based gas company announced on Sunday.

The cash-and-stock transaction will see ONEOK pay USD 25 and 0.667 shares of ONEOK’s common stock per each outstanding Magellan common unit, with a premium of 22% based on the closing stock price on May 12, 2023.

It includes taking on Magellan Midstream Partners’ debt of USD 5 billion.

The bought company will be merged with a new and wholly owned subsidiary of ONEOK.

The acquisition is expected to close in Q3 2023 and is subject to closing conditions and approvals.

The deal will see ONEOK move from being a transporter of gas and NGLs to having access to Magellan Midstream Partners’ refined products and crude oil transportation segments.

The combined company will have 44% of its activities in NGLs and 21% in refined products and own more than 40,200 kilometres of liquids-oriented pipelines.

The merger will raise the ONEOK’s estimated value to USD 60 billion.

“The combination of ONEOK and Magellan will create a diversified North American midstream infrastructure company with predominantly fee-based earnings, a strong balance sheet and significant financial flexibility focused on delivering essential energy products and services to our customers and continued strong returns to investors,” said Pierce H. Norton II, president and CEO of ONEOK.

“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.”