SemGroup Corporation’s (NYSE: SEMG) shares were up 62% in midday trade on Monday after the company announced that it will be acquired by Energy Transfer LP (NYSE: ET) for around $5.1 billion, including debt. Shares of Energy Transfer were down 3.6%.
Under the terms, SemGroup shareholders will receive $6.80 per share in cash and 0.7275 of an ET common unit for each SemGroup share, or approx. 40% cash and 60% equity. The deal represents a 65% premium to SemGroup’s closing share price on Friday. Upon close of the transaction, SemGroup shareholders are expected to own approx. 2.2% of ET’s outstanding common units.
The deal is expected to close by late 2019 or early 2020, subject to approvals. This acquisition will expand Energy Transfer’s geographic footprint and help increase the connectivity for its crude oil and NGL transportation businesses.
The transaction will also help in expanding Energy Transfer’s crude oil and NGL infrastructure through the addition of assets and pipelines in Colorado and Oklahoma. The deal is expected to be immediately accretive to distributable cash flow per common unit.
The combined entity expects to generate more than $170 million of annual run-rate synergies, comprising commercial and operational synergies of $80 million, financial savings of $50 million and cost savings of $40 million.
In its most recent quarter, SemGroup reported revenues of $675 million and net loss attributable to common shareholders of $35 million, or $0.45 per share.