Summary
Kinder Morgan, Inc. (KMI) announced on October 19, 2011, that it entered into a Merger Agreement with El Paso Corporation on October 16, 2011. This 8-K filing details the terms of this significant acquisition, which involves a multi-step merger intended to qualify as a reorganization for tax purposes. The transaction structure aims to integrate El Paso into Kinder Morgan's wholly-owned subsidiary structure upon completion. Investors should note that the consideration for El Paso shareholders will consist of a mix of Kinder Morgan Class P common stock, cash, and warrants to purchase Kinder Morgan common stock. The exact mix is subject to shareholder elections and proration, with approximately 57% of the aggregate merger consideration (excluding warrants) to be paid in cash and at least 43% in Kinder Morgan stock. The warrants will have an exercise price of $40.00 and a five-year term. The company also disclosed that it has secured a commitment letter for significant financing to support the transaction.
Key Highlights
- 1Kinder Morgan, Inc. (KMI) entered into a definitive Merger Agreement with El Paso Corporation on October 16, 2011.
- 2The transaction is structured as a multi-step merger designed to qualify as a tax-free reorganization for both companies.
- 3El Paso shareholders will receive a combination of Kinder Morgan Class P common stock, cash, and warrants to purchase Kinder Morgan stock.
- 4The merger consideration includes approximately 57% cash and at least 43% stock (excluding warrants), subject to election and proration.
- 5Each El Paso stock option and restricted stock unit will be converted into an award of New EP and subsequently into cash or a mix of cash and Kinder Morgan stock, along with warrants.
- 6Kinder Morgan has secured commitment letters for substantial financing, including senior term loan and revolving credit facilities, totaling up to $13.3 billion.
- 7The transaction is subject to customary closing conditions, including approval from both companies' stockholders, regulatory approvals (HSR Act), and listing approvals on the NYSE.