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AmeriGas acquires Energy Transfer assets

by Lou Whiteman | Published October 17, 2011 at 12:47 PM

Propane distributor AmeriGas Partners LP said Monday, Oct. 17, it would acquire the propane operations of Energy Transfer Partners LP in a $2.9 billion cash-and-stock deal.

Terms of the deal call for Dallas-based Energy Transfer to sell its Heritage Operating LP and Titan Energy Partners LP to AmeriGas in exchange for $1.5 billion in cash and AmeriGas shares worth $1.3 billion, with the buyer also assuming about $71 million in debt. Post-deal, Energy Transfer Partners would own 34% of AmeriGas and has committed to hold those shares until at least 2013. The seller would also appoint one member to AmeriGas' board of directors.

Energy Transfer is already in the process of acquiring Southern Union Co. for $5.2 billion to build its pipeline business. Last week it filed a revised proxy, revealing that spoiler bidder Williams Cos. made an attempt to buy assets of Southern Union.

Valley Forge, Pa.-based AmeriGas said the deal would add more than 1 million retail propane customers and more than 500 million gallons to its operations. The company already ranks as the nation's largest retail propane marketer, serving about 1.3 million customers in 50 states from nearly 1,200 locations.

Company CEO Eugene V.N. Bissell in a statement said the purchase "provides AmeriGas with an outstanding opportunity to grow its core business," adding that it should help the company meet its goal of increasing distributions by 5% per year.

"The combination of these two customer-focused teams will provide us with the unique opportunity to utilize a broader platform to enhance productivity, develop new growth opportunities and deploy new technologies," Bissell said.

AmeriGas is 44% owned by King of Prussia, Pa.-based holding company UGI Corp.

Energy Transfer, which has pipeline operations in eight states, said the deal will allow it to concentrate on its core business. "The structure and corresponding benefits of this transaction with AmeriGas ... make this the right move at the right time for Energy Transfer as we focus our efforts and resources on opportunities in the pipeline sector," company chairman and CEO Kelcy Warren said in a statement.

AmeriGas was advised by J.P. Morgan Securities LLC and a Shearman & Sterling LLP team led by partners Stephen Besen, David Connolly, Michael Shulman, Jason Lehner and Doreen Lilienfeld.

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