U.S. natural gas transporter Oneok agreed Sunday to buy oil pipeline operator Magellan Midstream Partners for $18.8 billion, including debt.
Headquartered in Tulsa, Oklahoma, Magellan manages approximately 19,000 miles of pipe carrying crude oil and refined products and more than 50 terminals in the central United States, from Texas to North Dakota. Oneok, also based in Tulsa, operates in roughly the same geographic area.
In addition to combining two complementary businesses, the deal will “better participate in today’s energy transformation with an increased presence in sustainable fuels and hydrogen transportation,” commented Oneok CEO Pierce Norton in a statement.
Under the terms of the agreement, Magellan shareholders will receive $25 in cash and 0.6670 Oneok shares for each of their shares. This represents a 22% premium to the closing price on May 12. Magellan’s shares were up 15% in electronic trading before the opening of the session, while Oneok’s shares were down 5.5%. The transaction, which requires regulatory approval, is expected to be completed in the third quarter.
