Energy Transfer has agreed to acquire Crestwood Equity Partners in an all-stock transaction that values Crestwood at $7.1 billion enterprise value.
Crestwood is a midstream company that primarily has gathering and processing assets in the Williston Basin in the Bakken, the Delaware Basin in the Permian, and, to a lesser extent, the Powder River Basin in Wyoming. The company was formed in 2001 and went public in 2013 following a merger with Inergy Midstream.
In the past couple of years, the company has been streamlining its portfolio, selling assets in the Marcellus and Barnett shale basins and buying Oasis Midstream (Williston Basin) for $1.7 billion in February 2022. It has its head office in downtown Houston.
ET has its head office in Dallas and is a much bigger company. Its market capitalization is $39 billion, compared to just $2.8 billion for Crestwood.
ET believes it can achieve cost synergies of $40 million a year. In addition, it should be able to refinance the debt acquired in the deal at a lower interest rate.
The Crestwood executive management are in line for big change-of-control payments, assuming they are terminated as a result of the deal. Bob Phillips, Chairman and CEO, who joined Crestwood in 2007, will receive $20 million. This includes the value of accelerated stock units. The other five senior executives will get a combined $36 million.
The deal is expected to close in Q4 2023.