Who is advising oil and gas products transporter Enterprise Products Partners LP (NYSE:EPD) on its $2.8 billion offer for affiliate Teppco Partners LP (NYSE:TPP)? That was the big question when Enterprise made its offer public and Teppco announced that it had turned it down but was open to a better offer.
Both companies said in the press releases they wouldn't make any more comments about a proposed deal unless a definitive agreement was signed. A Teppco spokesman said the company won't comment on its advisers, and Enterprise didn't return calls Wednesday seeking the names of its advisers.
But industry folk think the deal teams could include David Buck at Andrews Kurth LLP and Paul Perea at Baker Botts LLP, who have been handling the securities work of Enterprise and Teppco, respectively. Perea, along with Josh Davidson, advised Teppco on its $500 million acquisition of 42 push boats and 89 barges from Houma, La.-based Cenac Towing Co. and Cenac Offshore LLC in 2007, its largest acquisition ever. Neither of those firms would comment Wednesday.
Will a deal happen? The market seems to think so, as Teppco's units were up 6% Wednesday (although they were down 1.8% by close). Analysts think consolidation of master limited partnerships in the oil patch is bound to continue, given the elimination of incentive distribution rights held by the general partners to maximize cash flow and reduce cost of capital as well as the need to simplify corporate structure and cut administrative expenses in this age of lower commodity prices, which is affecting the entire industry.
"In a potential combination, this entity would be the largest MLP and possess a formidable presence across the midstream space: natural gas, NGLs, refined products and crude oil," UBS analyst Ronald Barone said in a research note Wednesday. "We believe a combined entity would enjoy economies of scale, increased trading liquidity, a lower cost of capital and increased institutional interest."
- Claire Poole
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