Kinder Morgan Inc. (KMI) said its $22 billion management-led buyout received approvals from regulators in Colorado, Nebraska and Wyoming, but the deal probably won’t be completed until August because of a procedural schedule recently released by the California Public Utilities Commission (CPUC), which also must approve the transaction.
The termination date for KMI going private has been extended to Aug. 28, the company said.
KMI is being purchased by a group of investors, including CEO Richard D. Kinder, other senior members of KMI management, co-founder Bill Morgan, current board members Fayez Sarofim and Mike Morgan and affiliates of Goldman Sachs Capital Partners, American International Group, Inc., The Carlyle Group and Riverstone Holdings LLC.
KMI shareholders voted in December 2006 to approve the proposed agreement. Under the terms of the transaction, KMI stockholders (other than Knight Holdco LLC, Knight Acquisition Co., subsidiaries of KMI and some other specific cases) will receive $107.50 in cash for each share of KMI common stock held. This represents a premium of 27% over the closing price of KMI stock on May 26, 2006, the last trading day before the investor group made its proposal to take the company private.
The KMI buyout received clearance in January from the Federal Trade Commission (FTC) following a settlement to resolve antitrust concerns over gasoline terminaling operations (see Daily GPI, Jan. 29; Dec. 20, 2006; May 31, 2006). The FTC challenged the buyout because private equity parties to the deal hold “significant positions” in KMI competitor Magellan Midstream, raising antitrust concerns over gasoline terminaling operations in 11 markets. Carlyle and Riverstone agreed to turn their interest in Magellan into a passive investment and establish safeguards against the sharing of competitively sensitive information between KMI and Magellan.
Through the proposed transaction, Carlyle and Riverstone would acquire a combined 22.6% interest in KMI. A private equity fund controlled and managed by Carlyle and Riverstone already holds a 50% interest in the general partner that controls Magellan.
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