Kinder Morgan To Fold Units Into One Company In $70B Deal


Aug 10 (Reuters) - Top U.S. pipeline company Kinder Morgan Inc said on Sunday it will put all its publicly traded units under one roof in a $70 billion deal, responding to investor concerns about its growth prospects and complicated financial structure.

The oil and gas pipeline company said it would shed the tax-advantaged legal structure it had popularized during the U.S. shale boom, the Master Limited Partnership (MLP), and fold its units into one company with a market capitalization of $92 billion organized as a C-corporation.

The affected units include Kinder Morgan Energy Partners LP , Kinder Morgan Management, and El Paso Pipeline Partners. The deal is comprised of $40 billion in Kinder Morgan Inc equity, $4 billion in cash and $27 billion in assumed debt.

Chairman and Chief Executive Officer Rich Kinder had been under pressure from investors and last month on Kinder Morgan Partners' second-quarter earnings call said combinations of the Kinder companies were being evaluated.

A source familiar with the matter said Kinder Morgan's overall valuation had suffered because it traded as four entities and the market struggled to understand it.

The MLP structure also required the units to hand over some 40 percent of their cash to general partners, hurting Kinder Morgan's ability to make acquisitions that will now be easier to carry out, the source added.

At one point, people involved in the transaction considered putting all the units into a single MLP, the source said.


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