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AmeriGas Partners to buy propane operations from Energy Transfer Partners for $2.9 billion

Published: 20:26 17 Oct 2011 BST

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AmeriGas Partners (NYSE:APU) will buy the propane operations of Energy Transfer Partners (NYSE:ETP) in a cash-and-share deal valued at $2.9 billion.

Under the terms of the agreement, AmeriGas will receive the propane operations, comprised of Heritage Operating LP and Titan Energy Partners LP. In consideration, it will pay Energy Transfer $1.5 billion in cash, and about $1.3 billion in AmeriGas common shares.

AmeriGas will also assume about $71 million in Heritage debt.

Energy Transfer CEO, Kelcy Warren said: "Our exit from our successful propane operations was not an easy decision; however, the structure and corresponding benefits of this transaction with AmeriGas, a company we have always admired in this business, make this the right move at the right time for Energy Transfer as we focus our efforts and resources on opportunities in the pipeline sector - our primary business.

The transaction will be tax-efficient to Energy Transfer shareholders, said Energy Transfer CFO, Martin Salinas, adding that it will provide means to reducing the company's debt.

Salinas commented: "We have verified with the ratings agencies that this transaction and the proposed structure support maintaining [Energy Transfer's] investment grade credit ratings."

Following the deal's close, Energy Partners will own about 34 percent of AmeriGas common shares, which it has committed to retaining until at least 2013.

Subject to customary regulatory approvals, the transaction is expected to close either late 2011 or early 2012. No shareholder approval is required.

In New York, Energy Transfer shares rose 5.41 percent to $43.65 as of 3:20 pm EDT.

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