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Phillips 66 8-K Report, Material Agreement (Jan 6, 2023)

Filed January 6, 2023For Securities:PSX

Summary

Phillips 66 (PSX) announced on January 5, 2023, a definitive agreement to acquire the remaining publicly held common units of DCP Midstream, LP (DCP) for $41.75 per unit in cash. This transaction represents a significant step in Phillips 66's strategy to consolidate its ownership in the midstream sector. The acquisition will increase Phillips 66's economic interest in DCP from 43.3% to approximately 86.8%, with Enbridge Inc. retaining its 13.2% stake. The deal values DCP at approximately $3.8 billion, excluding DCP's debt, and is expected to close by October 5, 2023, subject to customary closing conditions and regulatory approvals. The transaction was unanimously approved by DCP's Special Committee and Board of Directors, who retained independent advisors to evaluate the terms. This move is expected to enhance Phillips 66's integrated value chain and provide greater operational and financial flexibility. The cash consideration of $41.75 per common unit offers a clear cash payout for public unitholders. The acquisition also includes provisions for quarterly cash distributions of $0.43 per common unit for quarters ending on or after December 31, 2022, until the merger's effective time, ensuring continued returns for unitholders during the interim period. Investors should monitor the regulatory approval process and the definitive information statement for further details.

Key Highlights

  • 1Phillips 66 enters into a definitive agreement to acquire the remaining public common units of DCP Midstream, LP for $41.75 per unit in cash.
  • 2The transaction will increase Phillips 66's economic interest in DCP Midstream from 43.3% to approximately 86.8%.
  • 3The deal values DCP Midstream at approximately $3.8 billion (excluding debt).
  • 4DCP Midstream public unitholders will receive a cash distribution of $0.43 per common unit for each completed quarter ending on or after December 31, 2022, prior to the merger's closing.
  • 5The merger is expected to be completed by October 5, 2023, subject to customary closing conditions and regulatory approvals.
  • 6The transaction was unanimously approved by DCP Midstream's Special Committee and Board of Directors.
  • 7Phillips 66 plans to file an information statement and other relevant documents with the SEC regarding the proposed transaction.

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