Magellan Midstream (NYSE:MMP) Partners, a leading pipeline company, has secured approval from its unit holders for a $19 billion merger with Oneok, as announced on Thursday. The merger, which is set to be finalized before the market opens on September 25, 2023, will unite two of the largest energy pipeline operators in the U.S.
The proposal for this deal was first made in mid-May and faced resistance from some Magellan unit holders. Their concerns centered around the potential for a significant tax bill and doubts about the strategic value of the merger. However, Magellan's management received support from unit holders after making a case that the merger would offer a substantial premium to unit holders and result in a more diversified and stable business.
Preliminary results from the Magellan Special Meeting of Unitholders indicated that approximately 76% of common units voted in favor of the merger. This represents about 111.2 million units or 55% of total outstanding units. Oneok's unit holders also demonstrated strong support for the transaction.
Following the announcement on Thursday, Magellan Midstream Partners units were trading slightly down at $69.02, while Oneok slipped 1.3% to $66.13. Magellan's trading value aligns with the deal value, estimated at roughly $69.10 per unit.
As part of the deal, Oneok will offer 0.667 of its units and $25 cash per Magellan unit. Prior to this announcement, Magellan units were trading around $55.
The merger required approval from more than half of Magellan's outstanding units and narrowly achieved this with 55% approval. Non-votes were effectively considered as votes against the merger.
One notable opponent of the merger was Energy Income Partners, a large institutional holder that owns 3% of the units. Despite this opposition, Magellan successfully navigated the merger approval process.
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