Targa Resources Partners LP, based in Houston, will pay $4 billion and assume $1.8 billion in debt for Atlas Pipeline. Each Atlas Pipeline unitholder will receive 0.5846 units of Targa Resources Partners and a one-time cash payment of $1.26 per Atlas Pipeline unit for total consideration of $38.66 per Atlas Pipeline unit.
Current Targa Resources Partners unitholders will own about 66 percent of the combined partnership, and current Atlas Pipeline unitholders will own approximately 34 percent.
With the deal, Targa will add Woodford/SCOOP, Mississippi Lime and Eagle Ford and additional Permian assets to its existing Permian, Bakken, Barnett, and Louisiana Gulf Coast operations.
Atlas Pipeline is based in Tulsa, Oklahoma.
Atlas Energy LP will spin off its non-midstream assets before the buyout. The acquisition of Atlas Energy consists of $610 million in cash and 10.35 million Targa Resources Corp. shares valued at approximately $1.26 billion.
Current Targa Resources Corp. shareholders will own about 80 percent of the business, with Atlas Energy unitholders owning approximately 20 percent.
The acquisitions are contingent on each other. The transactions will close concurrently.
The boards of each respective business have approved the deals. The Atlas Pipeline transaction is subject to the approval of the holders of a majority of the limited partner interests in the business. The Atlas Energy deal is subject to the approval of the holders of the limited partner interests in the business and the holders of the shares of common stock of the company.
The transactions are expected to close early next year.
Atlas Energy's stock jumped $6.59, or 20.3 percent, to $39 before the market opened Monday. Shares of Atlas Pipeline rose $4.39, or 13.1 percent, to $38.01. Shares of Targa Resources Corp. gained $1.35 to $123.