ONEOK to acquire all outstanding units of Magellan for $18.8B in a cash-and-stock transaction; implied value to each Magellan unitholder of $67.50/unit
Highlights:
Magellan will be merged into a newly created 100% wholly-owned subsidiary of ONEOK
Consideration consists of $25.00 in cash and 0.6670 shares of ONEOK common stock for each outstanding Magellan common unit,; implied value to each Magellan unitholder of $67.50 per unit with total enterprise value of $60.0B
Expected to close in 3Q23 and has been unanimously approved by the board of both companies
ONEOK secured $5.25B in fully committed bridge financing for the proposed cash consideration
Pierce Norton will continue to serve as CEO of the combined company, ONEOK to nominate one or two director(s) serving on the board of Magellan's general partner.
Expected to be EPS accretive beginning in 2024 with EPS accretion of 3% to 7% per year from 2025 through 2027, and FCF/share accretion averaging more than 20% from 2024 through 2027. Base forecasted synergies are expected to total at least $200M annually.
From a tax perspective, ONEOK expects to benefit from the step-up in Magellan's tax basis from the transaction, thus deferring the expected impact of the new corporate alternative minimum tax from 2024 to 2027
Combined company expects pro-forma 2024 year-end net debt-to-EBITDA of 4.0 times. ONEOK expects leverage to decrease below 3.5 times by 2026 as future growth projects are placed in service.
ONEOK Inc. (OKE) Update - May 14
ONEOK Inc. (OKE) Update - May 14
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group