01—Abstract
Summary
Summary of the 8-K filed October 15, 2024. Cited figures are marked; the original filing is the authoritative source.
On October 15, 2024, ONEOK, Inc. (NYSE: OKE) completed its acquisition of Global Infrastructure Partners' (GIP) entire interest in EnLink Midstream, LLC (NYSE: ENLC) for approximately $3.285 billiona in cash.
The transaction comprised 200,340,753 EnLink common units (about 43.4% of outstanding units) at $14.90b per unit, plus 100% of the interests in EnLink's managing member for $300 million. The closing followed expiration of the HSR Act waiting period under the Purchase Agreement dated August 28, 2024. With the closing, ONEOK controls EnLink's managing member and is replacing GIP-designated directors with ONEOK-chosen directors, including CEO Pierce H.
Norton II (who becomes EnLink board chairman), CFO Walter S. Hulse III, and Chief Legal Officer Lyndon C. Taylor.
EnLink will be consolidated as a subsidiary of ONEOK for GAAP reporting. ONEOK stated that the combined asset base should enhance synergies, reduce leverage, and increase accretion to ONEOK shareholders, and it intends to pursue a tax-free acquisition of EnLink's publicly held common units. For investors, the deal expands ONEOK's footprint in the Permian Basin, Mid-Continent, North Texas and Louisiana, and establishes a new strategic position in Louisiana.
The filing is furnished under Regulation FD and Item 8.01 rather than filed, and the management claims on synergies, leverage, and accretion are forward-looking and subject to integration, regulatory, and commodity-price risks. ONEOK also noted it continues to work toward closing its separate acquisition of GIP's equity interests in Medallion Midstream.
02—Key points
Key Highlights
- ONEOK closed the acquisition of GIP's entire interest in EnLink Midstream for approximately $3.285 billion in cash, after HSR Act waiting period expiration.
- Acquired 200,340,753 EnLink common units (~43.4% of outstanding) at $14.90 per unit, plus 100% of EnLink's managing member interests for $300 million.
- ONEOK now controls EnLink's managing member; GIP-designated board members are replaced, with CEO Pierce H. Norton II becoming EnLink board chairman.
- EnLink becomes a consolidated subsidiary of ONEOK for GAAP reporting purposes, affecting ONEOK's reported financials going forward.
- The deal expands ONEOK's integrated assets in the Permian Basin, Mid-Continent, North Texas and Louisiana, adding a new Louisiana position.
- ONEOK intends to pursue a tax-free acquisition of EnLink's publicly held common units, with management citing synergies, reduced leverage and increased accretion.
- ONEOK continues working toward closing its separate acquisition of GIP's equity interests in Medallion Midstream.
03—Questions
Frequently Asked Questions
How much did ONEOK pay for the EnLink stake, and how was the consideration structured?
ONEOK paid approximately $3.285 billion in cash in total. This consisted of roughly 43% of EnLink's outstanding common units at $14.90 per unit, plus 100% of the managing member interests for $300 million.
Does ONEOK now control EnLink?
Yes. ONEOK acquired control of EnLink's managing member, and the board members designated by GIP are being replaced with ONEOK-selected directors, including Pierce H. Norton II as chairman. EnLink will be consolidated as a subsidiary for GAAP reporting.
What is ONEOK's stated rationale for the transaction?
ONEOK says the deal expands its integrated asset base in key basins, including the Permian Basin, and establishes a new position in Louisiana. Management expects enhanced synergies, reduced leverage, and increased accretion to ONEOK shareholders.
What might happen next for EnLink's public unitholders?
ONEOK intends to pursue a tax-free acquisition of the publicly held EnLink common units. EnLink unitholders could receive ONEOK stock, which ONEOK describes as more liquid and offering an attractive dividend yield. No terms of such a transaction were disclosed in this filing.
What risks should investors consider?
Forward-looking statements flag risks including integration difficulties, failure to realize expected synergies, changes in credit ratings, potential changes to ONEOK's capital structure, regulatory approval issues, customer and employee retention, economic downturns, commodity price declines, and environmental regulation changes.
04—Continue