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Kinder Morgan Energy Partners to Swallow Copano

By Rich Duprey - May 1, 2013 at 1:59PM

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Shareholders approve deal for midstream natural gas company that, including debt, totals about $5 billion.

Unconventional shale plays in the U.S. continue to drive the boom in American energy, and shareholders of midstream natural gas provider Copano ( CPNO ) took a step this week to ensure they'll be a part of the industry's continued growth by approving the company's merger with Kinder Morgan Energy Partners (NYSE: KMP). The merger was announced back in January and more than 99% of the units voted approved it Tuesday.

The all-stock deal values Copano at $3.2 billion, but including company debt the total transaction is worth some $5 billion. Kinder Morgan will acquire all of Copano's outstanding units in a 100% unit-for-unit transaction with an exchange ratio of 0.4563 Kinder Morgan units for each Copano unit. 

Copano operates approximately 7,000 miles of natural gas pipelines in Texas, Oklahoma, and Wyoming with capacity of 2.7 billion cubic feet per day of gas and nine processing plants with more than 1 bcf/d capacity. 

Its largest shareholder with a 14% stake, TPG Capital, signed off on the deal, no doubt enjoying the 41% premium it will receive for the $300 million it invested in the midstream player in 2010.

Kinder Morgan Energy said in January that it expects to retain the "vast majority" of the 415 people employed by Copano. The transaction is expected to be modestly accretive to KMP in 2013 and about $0.10-per-unit accretive for at least the next five years beginning in 2014.

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