Kinder Morgan announced that it is consolidating its vast oil and gas pipeline empire in a $70B single company. The company announced that it is shedding its tax-advantaged legal structure it had popularized during the US shale boom; the MLP into one company. This will transform Kinder Morgan Inc into a $92B market cap mega-corporation. This combined entity will be the largest energy infrastructure company in North America and the third largest energy company overall.
The affected units include Kinder Morgan Energy Partners LP (KMP), Kinder Morgan Management LLC (KMR) and El Paso Pipeline Partners LP (EPB). KMP shareholders will receive 2.1931 shares of KMI and $10.77 in cash; KMR shareholders will receive 2.4849 shares of KMI; EPB shareholders will receive 0.9451 shares of KMI and $4.65 in cash. Both KMP and EPB shareholders will be able to elect cash or KMI stock consideration subject to proration.
There is also some great news for KMI shareholders (including your truly) – the expected dividends for 2015 are $2.00, a 16% increase over current $1.72 KMI pays at a yield of 4.76%. In addition, KMI is expected to grow dividends at a rate of 10% each year from 2015 to 2020.
The current and simplified company structure is show below (source: Kinder Morgan presentation):
Full Disclosure: Long KMI. My full list of holdings is available here.