Kinder Morgan and El Paso complete $21bn merger

US natural gas pipeline operator Kinder Morgan Inc (NYSE:KMI) said it had finalised its planned USD21bn (EUR16.7bn) combination with peer El Paso Corp (NYSE:EP) announced last October.

The transaction, effective as of 25 May, converts Kinder Morgan into the largest midstream company and the fourth largest energy company in North America, based on enterprise value.

Its new position as the US’ largest transporter and storage operator of natural gas, ensures many growth opportunities for Kinder Morgan in the US, which it plans to pursue as means to create value for shareholders and to benefit employees and customers, chairman and CEO, Richard D. Kinder, said.

As part of the merger, El Paso agreed in February to sell its exploration and production business EP Energy to a group led by private equity firm Apollo Global Management LLC (NYSE:APO) in a deal worth some USD7.15bn, which has also been completed, the companies said.

In order to secure regulatory clearance for the tie-up, Kinder Morgan had agreed to sell some of its own assets, which it plans to do in the third quarter this year. The Federal Trade Commission gave it six months from the date of its ruling on 1 May to complete the divestment.

The acquisition of El Paso was financed with cash and stock.
Kinder Morgan said the combination will be accretive to its results. It will generate annual cost savings of over USD400m, above Kinder Morgan’s initial projection of around USD350m, the buyer added.