SemGroup Corporation recently announced that it has entered into a $5.1-billion contract to be acquired by pipeline giant Energy Transfer (ET - Free Report) . The stock soared 61% in yesterday’s trade while units of Energy Transfer fell more than 4%.
The deal, which includes the assumption of debt and liabilities, comprises $6.80 in cash and 0.7275 units of Energy Transfer for each outstanding share of SemGroup, which also implies 40% cash and 60% equity. The transaction values SemGroup’s shares at $17, accounting for a 65% premium to the closing price prior to announcement.
The buyout agreement is expected to unlock significant value for shareholders of the combined entity, generating anticipated annual run-rate synergies of approximately $170 million consisting of $80 million of commercial and operational synergies, $50 million of financial savings and $40 million of Expense savings.
For the oil and natural gas midstream company in particular, the transaction is a win-win proposition for its shareholders in which they receive a substantial premium and get the opportunity to participate in one of the biggest midstream operators in the country with access to all major U.S. production basins.
The merger, if successful, will boost Energy Transfer’s crude oil shipping and export prospects with the inclusion of the Houston Fuel Oil Terminal having 18.2 million barrels of crude oil storage capacity. The acquisition deal will also augment this Dallas, TX-based partnership’s energy infrastructure system by adding SemGroup’s crude gathering facilities to Colorado’s DJ Basin and Oklahoma’s Anadarko Basin. Moreover, this takeover will bring the oil and NGL pipelines between DJ and Anadarko Basins together with crude oil terminals in Cushing, OK.
However, the stock’s dip on a day when share prices of most energy players spiked following an attack on Saudi Arabia's oil production facilities is noteworthy and is indicative of the pressure from unitholders on capital discipline.
The pact is expected to be completed by this year-end or early next year, subject to customary conditions. Upon the contract’s closure, SemGroup shareholders are predicted to hold nearly 2.2% of Energy Transfer’s outstanding common units.
Zacks Rank & Key Picks
SemGroup carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include BP Midstream Partners and Dril-Quip, Inc. (DRQ - Free Report) , each carrying a Zacks Rank #2 (Buy). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BP Midstream’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters.
Dril-Quip earnings beat the Zacks Consensus Estimate in three of the previous four quarters.
5 Stocks Set to DoubleZacks experts released their picks to gain +100% or more in 2020. One is a famous cutting-edge food company that is “hiding in plain sight.” Swamped with competitors and ignored by Wall Street, its stock price floundered. Now, suddenly, it acquired a company that gives it an advantage none of its peers have.
Today, see all 5 stocks with extreme growth potential >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
SemGroup Corporation recently announced that it has entered into a $5.1-billion contract to be acquired by pipeline giant Energy Transfer (ET - Free Report) . The stock soared 61% in yesterday’s trade while units of Energy Transfer fell more than 4%.
The deal, which includes the assumption of debt and liabilities, comprises $6.80 in cash and 0.7275 units of Energy Transfer for each outstanding share of SemGroup, which also implies 40% cash and 60% equity. The transaction values SemGroup’s shares at $17, accounting for a 65% premium to the closing price prior to announcement.
The buyout agreement is expected to unlock significant value for shareholders of the combined entity, generating anticipated annual run-rate synergies of approximately $170 million consisting of $80 million of commercial and operational synergies, $50 million of financial savings and $40 million of Expense savings.
For the oil and natural gas midstream company in particular, the transaction is a win-win proposition for its shareholders in which they receive a substantial premium and get the opportunity to participate in one of the biggest midstream operators in the country with access to all major U.S. production basins.
The merger, if successful, will boost Energy Transfer’s crude oil shipping and export prospects with the inclusion of the Houston Fuel Oil Terminal having 18.2 million barrels of crude oil storage capacity. The acquisition deal will also augment this Dallas, TX-based partnership’s energy infrastructure system by adding SemGroup’s crude gathering facilities to Colorado’s DJ Basin and Oklahoma’s Anadarko Basin. Moreover, this takeover will bring the oil and NGL pipelines between DJ and Anadarko Basins together with crude oil terminals in Cushing, OK.
However, the stock’s dip on a day when share prices of most energy players spiked following an attack on Saudi Arabia's oil production facilities is noteworthy and is indicative of the pressure from unitholders on capital discipline.
The pact is expected to be completed by this year-end or early next year, subject to customary conditions. Upon the contract’s closure, SemGroup shareholders are predicted to hold nearly 2.2% of Energy Transfer’s outstanding common units.
Zacks Rank & Key Picks
SemGroup carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include BP Midstream Partners and Dril-Quip, Inc. (DRQ - Free Report) , each carrying a Zacks Rank #2 (Buy). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BP Midstream’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters.
Dril-Quip earnings beat the Zacks Consensus Estimate in three of the previous four quarters.
5 Stocks Set to Double
Zacks experts released their picks to gain +100% or more in 2020. One is a famous cutting-edge food company that is “hiding in plain sight.” Swamped with competitors and ignored by Wall Street, its stock price floundered. Now, suddenly, it acquired a company that gives it an advantage none of its peers have.
Today, see all 5 stocks with extreme growth potential >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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