Shares of Höegh LNG Partners (HMLP), a limited partnership focused on liquefied natural gas (LNG), surged 31% on Wednesday after it reached a merger deal with its parent company, Höegh LNG Holdings.
Höegh LNG Holdings created Höegh LNG Partners in 2014 to purchase and operate LNG carriers, floating storage and regasification units, and other infrastructure assets. Now, the LNG service provider apparently wants to bring the limited partnership back under its corporate shell.
Under the terms of the deal, Höegh LNG Holdings would buy all Höegh LNG Partners' outstanding units it does not already own (it currently has a 45.7% stake) for $9.25 per unit, or roughly $167.6 million in cash. That's a premium of 35% to the partnership's closing price on Tuesday and a nearly 118% increase from Höegh LNG Holdings' previous offer in December.
The transaction is anticipated to close in the second half of this year, subject to regulatory and unitholder approval.
Höegh LNG Partners' floating storage and regasification units can serve as LNG import terminals. With the war between Russia and Ukraine driving many governments to seek out new sources of energy from suppliers in less conflict-prone regions, demand for the partnership's infrastructure and services is likely to surge in the coming years. Höegh LNG Holdings knows this, and it's likely one of the reasons it decided to boost its offer so substantially.