Magellan Midstream Partners unit holders have given their approval for the pipeline company’s merger agreement with Oneok, according to a recent announcement. The merger, set to close on Sept. 25, will bring together two of the largest energy pipeline operators in the country.
A Deal Fueled by Sizeable Premium and Strategic Benefits
The merger deal, which was reached in mid-May, faced some opposition from Magellan holders who expressed concerns about potential tax expenses and questioned the strategic value of the transaction. However, Magellan management stood firm, highlighting the sizeable premium offered to unit holders and the potential for a more diversified and stable business.
Overwhelming Support from Unit Holders
The Magellan Special Meeting of Unitholders recently took place, and the preliminary results indicate that approximately 76% of the common units voted in favor of the merger. This translates to around 111.2 million units, or 55% of the outstanding units. Oneok holders also overwhelmingly backed the transaction.
Following the announcement, Magellan Midstream Partners units (ticker: MMP) saw a slight decline of 0.1% to $69.02. Similarly, Oneok (OKE) slipped 1.3% to $66.13. It is worth noting that Magellan’s trading price aligns with the calculated value of the deal, estimated at approximately $69.10 per unit.
The Merger Details
As part of the agreement, Oneok is offering 0.667 of its units and $25 in cash per Magellan unit. Prior to the announcement of the deal, Magellan units were trading around $55.
Approval Despite Opposition
For the merger to proceed, it required the majority approval of the outstanding Magellan units. Fortunately, the deal successfully garnered the necessary support with 55% of the units approving it. Non-votes were effectively considered as no votes. Opposition from Energy Income Partners, a large institutional holder holding 3% of the units, ultimately did not impede the merger.
For more information, please contact Andrew Bary.