On Sunday, pipeline operator Kinder Morgan announced a massive deal that would combine the company’s four publicly traded entities into one company.
Following the announcement, shares of the parent Kinder Morgan (KMI) were up 17%, Kinder Morgan Energy Partners (KMP) was up 24%, and Kinder Morgan Management (KMR) was up 29%, and El Paso Pipeline Partners (EPB) was up 27%.
“All shareholders and unitholders of the Kinder Morgan family of companies will benefit as a result of this combination,” Chairman and CEO Richard D. Kinder said in a press release. “Everyone will hold a single, publicly traded security — KMI — which will have a projected dividend of $US2.00 in 2015, a 16 per cent increase over the anticipated 2014 dividend of $US1.72.”
“This combined entity will be the largest energy infrastructure company in North America and the third-largest energy company overall with an estimated enterprise value of approximately $140 billion. Additionally, we will have a leading position in each of our business segments and operate in the rapidly growing North American energy infrastructure sector,” Kinder said.
The New York Times’ David Gelles noted that the deal reversed the master limited partnership model that Kinder pioneered in the 1990s.
Kinder told Gelles that: “Even though I’m the largest shareholder and one of the two cofounders, it’s hard to understand.”
This graphic from RBC Capital Markets shows a before-and-after of the company’s operating structure.
Business Insider Emails & Alerts
Site highlights each day to your inbox.