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Enterprise Products Partners To Acquire Enterprise GP For 16% Premium (EPD,EPE)
Sep 07, 2010 (SmarTrend News Watch via COMTEX) --
9/7/2010-Enterprise Products Partners (NYSE:EPD) and Enterprise GP Holdings (NYSE:EPE) announced Tuesday that they have entered into a definitive agreement that will result in the merger of EPE with a wholly owned subsidiary of EPD by way of a unit-for-unit exchange.
Terms of the transaction includes EPE shareholders receiving 1.5 shares of EPD common stock in exchange for every share of EPE they own, which represents a premium of approximately 16% based on its September 3rd close.
The merger would also result in a substantial increase in cash distributions for EPE unitholders. Based on the cash distributions paid in August 2010 by EPE and EPD, this would result in a 54 percent increase in cash distributions for the unitholders of EPE.
"We are pleased to announce our agreement to combine these two partnerships, which should reduce EPD's long-term cost of capital and simplify our organizational structure," said Michael A. Creel, president and chief executive officer of EPD's general partner. "Just like the landmark action taken in 2002 to eliminate our general partner's 50 percent incentive distribution rights, this transaction would not be possible without the continued support of EPCO and its affiliates and their agreement to waive a significant amount of distributions they would otherwise be entitled to receive during the first five years after the merger closes. With this support from EPCO in combination with our portfolio of growth opportunities and additional accretion provided by a lower cost of capital associated with the permanent elimination of the incentive distribution rights, we believe this merger will support the long-term growth of our partnership and cash distributions to our partners. In addition, we believe the merger will not impact our expected cash distribution growth rate nor practically affect our distribution coverage in the near term."
SmarTrend is bullish on shares of Enterprise GP and our subscribers were alerted to buy on June 10, 2010 at $45.11. The stock has risen 24.3% since the alert was issued.
Write to Chip Brian at cbrian@tradethetrend.com
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