TEPPCO Partners LP has turned down a $2.8 billion takeover proposal from Enterprise Products Partners LP but “remains willing to consider a revised proposal that appropriately recognizes the value of TEPPCO,” the company said Wednesday.

Enterprise had offered to acquire all of TEPPCO’s outstanding partnership interests for 1.043 Enterprise common units plus $1.00 in cash for each TEPPCO common unit. Based on the current number of outstanding TEPPCO units, the offer would have consisted of an aggregate of approximately 109.5 million Enterprise common units and $105 million in cash, according to Enterprise. The deal would have represented $21.89/share, or a premium of approximately 4.8% based on the 10-day average closing prices of TEPPCO units and Enterprise common units on March 6, the business day prior to the date on which Enterprise made its proposal to TEPPCO.

Enterprise shares closed at $24.24 on Wednesday, down 53 cents from Tuesday’s close. TEPPCO shares closed at $27.74 Wednesday, up $1.64 from Tuesday’s close.

While Enterprise said it does not currently own any TEPPCO units, the two companies are hardly strangers. Two years ago Enterprise GP Holdings LP gained a minority stake in Energy Transfer Equity LP and TEPPCO Partners LP through a pair of transactions, which together were worth an estimated $2.8 billion, becoming the first publicly traded partnership to own direct or indirect interests in the general partners of multiple publicly traded partnerships (see NGI, May 14, 2007). Both of the partnerships are controlled by Texas oilman Dan Duncan.

The Enterprise proposal did not specify consideration to be paid for TEPPCO’s general partner interests, including incentive distribution rights, which are owned by Texas Eastern Products Pipeline Co. (TEPPCO GP). TEPPCO GP is owned by Enterprise GP Holdings, which owns approximately 4.2% of the outstanding units of TEPPCO, the general partner of Enterprise, and approximately 3% of the outstanding common units of Enterprise.

The credit crunch and unrest in capital markets prompted Enterprise to scrap plans to take a stake in TransCanada Corp.’s proposed Pathfinder Pipeline late last year (see NGI, Jan. 5). At the time the company said Enterprise was poised for acquisitions, should the right deal come around.

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