Enterprise Products Partners (NYSE:EPD) and Oiltanking Partners (UNKNOWN:OILT.DL) investors have reason to celebrate. The companies announced recently that an agreement had been reached so that Enterprise Products Partners would buy out the rest of Oiltanking Partners' units that it did not already own. This announcement represented the second step of a two-step merger proposal that Enterprise first proposed in October. Let's take a closer look at why this deal really is a great one for investors in both companies.

Source: Enterprise Products Partners Investor Presentation.

Why this is a great deal for Enterprise Product Partners' investors
Enterprise Products Partners has partnered with Oiltanking Partners for more than 30 years. The bond is so strong that Enterprise is actually Oiltanking's largest customer -- representing 31% of Oiltanking's revenue and 40% of its EBITDA. Further, Oiltanking provides the company with essential dock and storage services for Enterprise's LPG export and octane enhancement business, which represents 10% of Enterprise's gross margins. That's on top of the fact that once Enterprise's LPG export facility is complete in 2016, it will have $1.5 billion worth of assets that are actually located on land owned by Oiltanking. Needless to say, Oiltanking is a critical partner, so securing control of this partner will reduce some of the company's risk.

In addition to reducing risk by taking control, Enterprise also estimates that the combined entity can achieve $30 million in synergies and costs savings simply by integrating the systems and reducing public company costs. Overall, the company anticipates that the deal will be accretive to distributable cash flow starting in 2016, which will enhance its already solid financial picture.

Add it all up and there are three core reasons why this is a great deal for Enterprise Product Partners investors. First, the company's risk is reduced as it will take control of a critical partner. Second, the deal will yield increased distributable cash flow, which will enable Enterprise Products Partners to continue to increase its distribution to investors as it looks to continue its streak of 41 straight distribution increases. Finally, the deal offers future flexibility as Enterprise can use its control to repurpose Oiltanking's assets for the best use, which could include using Oiltanking's docking facilities for future crude oil exports.

Why this is a great deal for Oiltanking Partners' investors
For Oiltanking Partners' investors, the deal is also about reducing risk. Given that Enterprise is its largest customer there was always a risk that Enterprise could look elsewhere in the future for the services provided by Oiltanking. Another risk that Oiltanking investors had was a rather concentrated business model. However, as part of a much larger, more diversified entity, investors will see that risk taper off substantially. As the following slide notes, being a part of the larger Enterprise Products Partners has lots of advantages.

Source: Enterprise Products Partners, L.P. Investor Presentation.

In addition to reducing risk, the slide also notes a couple of other compelling benefits for Oiltanking investors, including the financial benefits. Those benefits are now even more compelling under the revised proposal as Oiltanking investors are getting a bit more money than the deal terms first proposed by Enterprise Products Partners in October. The new exchange ratio of 1.3-to-1 is 5.7% higher than the first proposal, so investors receive a bit more value up front. Further, because of these new term investors will see an even higher 74% surge in quarterly distributions from day one. That initial boost is only the beginning as the distribution rate will likely continue to go higher given Enterprise's long history of raising its distribution, which will only be enhanced once this deal closes.

Investor takeaway
This is a deal that really makes sense for the investors of both companies. The deal not only reduces the risk on both sides as the control of the assets will be under one roof, but the deal also improves the financial profile of both companies and increases future flexibility. Taken together, all of these benefits make this deal is a great one for long-term investors.