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Ferrellgas Partners (FGP) Closes Buyout of Selph's Propane

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Keeping with the strategy of growing its core propane business through acquisitions, Ferrellgas Partners LP announced the acquisition of Colorado-based independent propane retailer, Selph’s Propane. The acquisition is expected to be immediately accretive to Ferrellgas’ earnings.

Acquisitions Driving Growth

Acquisitions have been a key growth driver at Ferrellgas Partners for more than seven decades. This strategy has enabled the partnership to grow from a single-location, independently owned propane retailer to a large publicly traded organization. The latest deal brings the total number of acquisitions in the partnership’s portfolio to nearly 240 over its 75 years of existence.

Such a large portfolio of acquired assets allows Ferrellgas Partners to reap significant benefits. In fiscal 2015, acquisitions contributed $19.9 million to the company’s total revenue.

Ferrellgas Partners’ wide presence throughout the U.S. positions it more favorably than other small-scale propane distributors. We believe that the latest acquisition will surely drive growth at the partnership, given that Colorado is a fast growing market for propane retailers.

FERRELLGAS - LP Price

Diversification Initiatives

Ferrellgas Partners is currently working on diversification strategy and is concentrating on acquiring crude oil midstream business. The partnership expanded its midstream business through the acquisition of Bridger Logistics, LLC for nearly $822.5 million.

It expects the acquired Bridger Logistics assets to generate $100 million in adjusted earnings before interest, tax, depreciation & amortization (EBITDA) in fiscal 2016. The acquisition contributed adjusted EBITDA of $28.7 million in the fiscal second quarter and $25.2 million in the fiscal third quarter.

Diversification by Other Operators

Western Gas Partners, LP (WES - Free Report) , a midstream energy assets operator, closed the acquisition of Springfield Pipeline LLC from Anadarko Petroleum Corp. in March for $750 million. It marks the entry of the partnership in the crude oil gathering and stabilization business and further diversifies its operation.

Zacks Rank & Key Pick

Ferrellgas Partners currently carries a Zacks Rank #5 (Strong Sell).

A top-ranked stock in the same space is CVR Refining, LP , sporting a Zacks Rank #1 (Strong Buy).

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