Inergy, L P and Inergy Holdings LP merge to create $6 billion company
10 Aug 2010
Inergy L P, the fourth-largest propane operator in the US, is buying over its holding partner Inergy Holdings LP in an all-stock transaction that values Inergy Holding at $2.09 billion and creates a $6 billion company.
Kansas City-based Inergy LP retails propane to residential, commercial, industrial, and agricultural customers having approximately 800,000 retail customers from over 300 customer service centres throughout the US.
The company also operates a natural gas storage business; a supply logistics, transportation, and wholesale marketing business that serve independent dealers and multi-state marketers in the US and Canada; and a mining and salt production company.
Inergy Holdings's assets consist of its ownership interest in Inergy L.P, including limited partnership interests, ownership of the general partners, and the incentive distribution rights.
Under the deal, Inergy Holdings unitholders will receive 0.77 Inergy, L P common units in exchange for each Inergy Holdings common unit they own at closing, representing a premium to Inergy Holdings unitholders of approximately 10 per cent based upon the 20-trading day average closing prices of both securities ending 3 August 2010.
The transaction will result in approximately 47.7 million additional units being issued by Inergy, L.P. Upon closing of the merger, the former owners of Inergy Holdings will own approximately 43.8 per cent of the combined entity.
The merger is expected to provide benefits to both companies by decreasing cost of Inergy, L.P's capital, through the elimination of the incentive distribution rights and attracting a broader investor base to a single, larger entity with increased public float and greater liquidity apart from simplifying the ownership structure.
"We expect that this transaction will increase our competitiveness, lower our cost of capital, improve the long-term growth profile of the company, and open up value creation opportunities that may not be available to us today," said John Sherman, president and CEO of Inergy in a statement.
