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Energy Transfer to acquire Enable Midstream Partners in $7.2B all-equity transaction

Highlights

Energy Transfer expects $100M in annual synergies

Enable owners OGE, CenterPoint support deal

Energy infrastructure giant Energy Transfer LP has agreed to acquire Enable Midstream Partners in an all-equity transaction valued at roughly $7.2 billion.

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Under the terms of the deal, Enable common unitholders will receive 0.8595 Energy Transfer common unit for each Enable common unit held, an exchange ratio that represents an at-the-market deal based on the 10-day, volume-weighted average price of the two partnerships' common units as of Feb. 12, according to a Feb. 17 news release. Upon deal completion, Enable unitholders will hold about 12% of Energy Transfer's outstanding common units.

Each outstanding Enable series A preferred unit will also be exchanged for 0.0265 Energy Transfer series G preferred unit.

Energy Transfer said the deal would expand its natural gas and NGL transportation business through the addition of natural gas gathering and processing assets in the Anadarko Basin in Oklahoma; Arkoma Basin across Oklahoma and Arkansas; and Haynesville Shale in East Texas and North Louisiana. It would also integrate assets with the partnership's NGL transportation and fractionation assets on the U.S. Gulf Coast.

In addition, Energy Transfer anticipates the combined entity to generate over $100 million of annual run-rate cost and efficiency synergies.

OGE Energy Corp. and CenterPoint Energy Inc. -- the two largest unit holders of Enable -- in two separate same-day news releases announced their support of the acquisition. OGE owns a 25.5% limited partner interest and 50% general partner interest in Enable, while CenterPoint holds a 53.7% limited partner interest in Enable. As part of the deal closing, CenterPoint will pay OGE $30 million.

The deal allows OGE to continue in its path to becoming a pure-play electric utility as it exits its investment in Enable. For CenterPoint, the deal is in line with its goal to eventually cut exposure to the midstream industry as it grows its "premium" regulated utility businesses, which will account for over 90% of its earnings, the company said.

Energy Transfer will also acquire Enable's general partner from OGE and CenterPoint for a $10 million cash payment. Following deal completion, OGE will own about 3% of Energy Transfer's outstanding units, while CenterPoint will receive a 6.5% stake in Energy Transfer.

Energy Transfer's board and Enable's conflicts committee and board have greenlighted the acquisition, which is slated to be completed in mid-2021.

Citi and RBC Capital Markets served as the financial advisers, while Latham & Watkins LLP acted as legal counsel to Energy Transfer. Goldman Sachs & Co. LLC acted as financial adviser, while Vinson & Elkins LLP served as legal counsel to Enable. Intrepid Partners LLC acted as the financial adviser, while Richards Layton & Finger PA served as legal counsel to Enable's conflicts committee.

JP Morgan Securities LLC served as financial adviser, while Baker Botts LLP and Wachtell Lipton Rosen & Katz acted as legal advisers to CenterPoint. Lazard and Morgan Stanley & Co. LLC served as financial advisers, while Jones Day acted as legal adviser to OGE.