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Tallgrass agrees to take-private deal with Blackstone infrastructure arm

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Essential Energy Insights - January 2021


Tallgrass agrees to take-private deal with Blackstone infrastructure arm

Tallgrass Energy LP has agreed to sell its all its shares to affiliates of The Blackstone Group Inc.'s infrastructure arm Blackstone Infrastructure Partners and other buyers for $22.45 per share.

Tallgrass will also sell shares to affiliates of Enagas SA, GIC Pte. Ltd., National Pension Service Investment Management and USS, according to a Dec. 17 news release. The buyers will fund the acquisition of the class A shares with roughly $3 billion of equity.

Tallgrass in August received an offer from Blackstone to take the partnership private by acquiring its shares the private equity firm does not already own. Blackstone, its partners and affiliates previously offered to buy Tallgrass' outstanding class A shares for $19.50 per share. In September, however, Tallgrass shareholder Tortoise Capital Advisors LLC advised the energy midstream company's independent board members to seek a higher buyout offer.

In addition, Tallgrass said it agreed not to pay distributions prior to deal closing. The merger agreement has received the unanimous approval of the conflicts committee of the board of directors of Tallgrass' general partner Tallgrass Energy GP LLC.

The transaction is scheduled to close in the second quarter of 2020, subject to customary conditions, including approval from a majority of Tallgrass' class A and class B shareholders. Tallgrass will stop publicly trading its class A shares upon deal closing.

Baker Botts LLP served as the legal adviser to Tallgrass. Evercore Group LLC served as the financial adviser and Bracewell LLP served as the legal adviser to the board of Tallgrass Energy GP. Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC served as the financial advisers, while Vinson & Elkins LLP served as the legal adviser to Blackstone.