Tallgrass (TEGP) To Lower Capital Cost Through Merger Deal
Zacks Investment Research | Mar 28, 2018 11:00PM ET
Tallgrass Energy GP, LP (NYSE:TEGP) announced plans to merge with Tallgrass Energy Partners (NYSE:TEP) .
For the acquisition to take place, Tallgrass Energy GP is expected to purchase 47.6 million common units of its master limited partnership — Tallgrass Energy Partners. Each unit holder of Tallgrass Energy Partners will get two Class A shares of Tallgrass Energy GP.
Following the closure of the merger, scheduled in the April to June quarter of 2018, the combined entity will be trade as Tallgrass Energy LP. The symbol of the ticker that will be listed in the NYSE is ‘TGE’.
Per management, once the merger is complete, Tallgrass Energy Partners will no longer pay incentive distribution rights to its general partner. Eventually, the cost of capital of Tallgrass Energy will be reduced significantly, which will be allotted for future growth projects and also for making acquisitions.
Based in Leawood, KS, Tallgrass Energy GP primarily provides services related to transportation of crude to customers in the domestic market. Tallgrass Energy GP has generated sufficient cashflow from its operations during 2017, which backed its capital spending.
However, the stock has lost 35.4% over the past year compared with the Original post
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