Enterprise Products Partners L.P. (NYSE:EPD, “Enterprise”) and
Oiltanking Partners, L.P. (NYSE:OILT, “Oiltanking Partners”)
announced today that Enterprise and Oiltanking Partners have
entered into a merger agreement. Under the terms of the merger
agreement, Oiltanking Partners would merge with a subsidiary of
Enterprise in a unit-for-unit exchange. Unitholders of Oiltanking
Partners (other than Enterprise and its subsidiaries) would receive
1.3 Enterprise common units for each Oiltanking Partners common
unit. This exchange ratio represents a 5.6 percent premium to
Oiltanking Partners unitholders based on the respective closing
prices for Enterprise and Oiltanking Partners common units on
September 30, 2014, the day before the merger was originally
proposed. Relative to the respective closing prices for Enterprise
and Oiltanking Partners common units on November 10, 2014, the day
before the parties entered into the merger agreement, the 1.3
exchange ratio represents a 10.4 percent premium to Oiltanking
Partners unitholders. Based on the latest cash distribution
declared by Enterprise and Oiltanking Partners with respect to the
third quarter of 2014, this exchange ratio would result in a 74
percent increase in cash distributions for Oiltanking Partners
unitholders.
The approval and adoption of the merger agreement require
approval by holders of a majority of the outstanding Oiltanking
Partners common units. A subsidiary of Enterprise, which will own a
sufficient number of Oiltanking Partners common units to approve
the merger on behalf of all Oiltanking Partners unitholders, has
executed a support agreement with Oiltanking Partners in which it
has irrevocably agreed to consent to the merger. This subsidiary
will own approximately 54.8 million Oiltanking Partners common
units, or approximately 66 percent of the total Oiltanking Partners
common units then outstanding, following the conversion of
approximately 38.9 million Oiltanking Partners subordinated units
into common units. The one-for-one conversion of these subordinated
units into common units will occur on November 17, 2014, the
business day immediately following payment of the Oiltanking
Partners cash distribution scheduled to be paid on November 14,
2014. Approval and adoption of the merger agreement will be
submitted to a vote of the unitholders of Oiltanking Partners.
“We are pleased to announce the execution of this merger
agreement that would result in the merger of Oiltanking Partners
into Enterprise,” said Michael A. Creel, chief executive officer of
the general partner of Enterprise. “The combination of Enterprise’s
system of midstream assets and Oiltanking Partners’ access to
waterborne markets and crude oil and petroleum products storage
assets would extend and broaden Enterprise’s midstream energy
services business. Upon completion of the merger, Oiltanking
Partners unitholders would benefit from Enterprise’s scale,
diversification and financial flexibility; visibility to growth
driven by over $6 billion of capital projects under construction; a
significant increase in cash distributions; and more daily
liquidity from ownership of Enterprise common units.”
On October 1, 2014, Enterprise announced that it had acquired
the general partner and related incentive distribution rights,
15,899,802 common units and 38,899,802 subordinated units in
Oiltanking Partners held by Oiltanking Holding Americas, Inc.
(“Oiltanking Holding”). Enterprise paid total consideration of
approximately $4.41 billion to Oiltanking Holding comprised of
$2.21 billion in cash and 54,807,352 Enterprise common units.
Enterprise also paid $228 million to assume notes receivable issued
by Oiltanking Partners and its subsidiaries. Enterprise also
announced that it had submitted a proposal to the conflicts
committee of the general partner of Oiltanking Partners to merge
Oiltanking Partners with and into Enterprise. Under the terms of
the proposal, Enterprise would have exchanged 1.23 Enterprise
common units for each Oiltanking Partners common unit. The exchange
ratio of 1.3 Enterprise common units for each Oiltanking Partners
common unit represents a 5.7 percent increase compared to the
exchange ratio in the earlier proposal.
Upon completion of the merger, which is expected to occur in
early 2015, the total consideration paid by Enterprise for the
Oiltanking Partners general partner and related incentive
distribution rights and the limited partner units would be
approximately $6.0 billion.
The merger terms were negotiated, reviewed and approved by the
conflicts committee of the board of directors of the general
partner of Oiltanking Partners and approved by the board of
directors of the general partner of Oiltanking Partners. The
Oiltanking Partners conflicts committee is comprised of the
independent members of the board of directors of Oiltanking
Partners’ general partner. As part of their evaluation process, the
Oiltanking Partners conflicts committee retained Jefferies LLC as
its financial advisor, Latham & Watkins LLP as its legal
advisor and Richards, Layton & Finger, P.A. as its special
Delaware legal advisor. Vinson & Elkins L.L.P. also acted as
special legal counsel to Oiltanking Partners.
Citi acted as financial advisor and Andrews Kurth LLP and Akin
Gump Strauss Hauer & Feld LLP acted as legal counsel to
Enterprise.
The closing of the merger is subject to customary closing
conditions, including effectiveness of a registration statement
related to the issuance of new Enterprise common units to
Oiltanking Partners’ unitholders.
Enterprise Products Partners L.P. is one of the largest publicly
traded partnerships and a leading North American provider of
midstream energy services to producers and consumers of natural
gas, NGLs, crude oil, refined products and petrochemicals. Our
services include: natural gas gathering, treating, processing,
transportation and storage; NGL transportation, fractionation,
storage and import and export terminals (including liquefied
petroleum gas or LPG); crude oil and refined products
transportation, storage and terminals; offshore production
platforms; petrochemical transportation and services; and a marine
transportation business that operates primarily on the United
States inland and Intracoastal Waterway systems and in the Gulf of
Mexico. Additional information regarding Enterprise can be found on
its website, www.enterpriseproducts.com.
This press release includes "forward-looking statements" as
defined by the U.S. Securities and Exchange Commission (the “SEC”).
All statements, other than statements of historical fact, included
herein that address activities, events, developments or
transactions that Enterprise and/or Oiltanking Partners expect,
believe or anticipate will or may occur in the future, including
anticipated benefits and other aspects of such activities, events,
developments or transactions, are forward-looking statements. These
forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially, including
approval of the proposed merger by Oiltanking Partners’
unitholders, the expected timing of the closing of the proposed
merger, any approvals by regulatory agencies, the possibility that
the anticipated benefits from such activities, events, developments
or transactions cannot be fully realized, the possibility that
costs or difficulties related thereto will be greater than
expected, the impact of competition and other risk factors included
in the reports filed with the SEC by Enterprise and Oiltanking
Partners. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of their
dates. Except as required by law, Enterprise and Oiltanking
Partners do not intend to update or revise their respective
forward-looking statements, whether as a result of new information,
future events or otherwise.
ADDITIONAL INFORMATION
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities. This communication
relates to a proposal which Enterprise has made for a business
combination transaction with Oiltanking Partners. In furtherance of
this proposal and subject to future developments, Enterprise and
Oiltanking Partners may file one or more registration statements,
proxy statements or other documents with the SEC. This
communication is not a substitute for any proxy statement,
registration statement, prospectus or other document Enterprise
and/or Oiltanking Partners may file with the SEC in connection with
the proposed transaction. INVESTORS AND SECURITY HOLDERS OF
ENTERPRISE AND OILTANKING PARTNERS ARE URGED TO READ THE PROXY
STATEMENT, REGISTRATION STATEMENT, PROSPECTUS AND OTHER DOCUMENTS
FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY
BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION. Any definitive proxy statement (if
and when available) will be mailed to unitholders of Oiltanking
Partners. Investors and security holders will be able to obtain
free copies of these documents (if and when available) and other
documents filed with the SEC by Enterprise and/or Oiltanking
Partners through the web site maintained by the SEC at http://www.sec.gov.
Enterprise, Oiltanking Partners and their respective general
partners, and the directors and certain of the executive officers
of the respective general partners, may be deemed to be
participants in the solicitation of proxies from the unitholders of
Oiltanking Partners in connection with the proposed merger.
Information about the directors and executive officers of the
respective general partners of Enterprise and Oiltanking Partners
is set forth in each company’s Annual Report on Form 10-K for the
year ended December 31, 2013, filed with the SEC on March 3, 2014
and February 25, 2014, respectively. These documents can be
obtained free of charge from the sources listed above. Other
information regarding the person who may be “participants” in the
proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement/prospectus and other relevant materials to be
filed with the SEC when they become available.
Photos/Multimedia Gallery Available:
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Enterprise Products Partners L.P.Randy Burkhalter, 713-381-6812
or 866-230-0745Investor RelationsRick Rainey, 713-381-3635Media
RelationsorOiltanking PartnersMark Buscovich, 281-457-7929 or
855-866-6458Investor RelationsRick Rainey, 713-381-3635Media
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