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Tallgrass Closes $1.8B Deal for Kinder Midstream Assets

Tallgrass Energy Partners LP has closed on a previously announced deal to buy Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Co., Kinder Morgan Energy Partners LP's (KMP) Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming, and KMP's 50% interest in the Rockies Express Pipeline (REX), Tallgrass said Tuesday.

KMP sold the assets to comply with antitrust stipulations related to Kinder Morgan Inc.'s recent acquisition of El Paso Corp. (see Daily GPI, Aug. 21; May 25; April 20). Overland Park, KS-based Tallgrass paid $1.8 billion in cash for the assets. Including REX debt, the deal is worth $3.3 billion.

In March Kinder Morgan Inc. said it had reached an agreement with the Federal Trade Commission (FTC) to divest certain KMP assets in the Rockies in order to obtain regulatory approval of its acquisition of El Paso, which closed in May. The FTC last week gave its final approval to Kinder's plan to sell midstream assets to Tallgrass.

Tallgrass CEO David G. Dehaemers Jr. previously served as CFO and executive vice president (EVP) of corporate development at Kinder Morgan from 1997 to 2003. He served as the EVP of corporate development at Inergy LP from 2003 to 2007 and was one of the owners of Inergy LP's general partner, NRGP, when it went public in 2005.

Tallgrass is owned by the management team of Tallgrass, Kelso & Co. and a limited group of investors led by The Energy & Minerals Group, including Magnetar Capital.

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