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Unitholders of MLP Tallgrass Energy Partners Approve Merger with Tallgrass Energy GP.


26 June 2018 - Unitholders of midstream MLP Tallgrass Energy Partners, LP (NYSE: TEP) have approved the partnership's agreed deal to merge with US-based midstream energy Tallgrass Energy GP, LP (NYSE: TEGP), the companies said.

In March, Tallgrass Energy GP and Tallgrass Energy Partners inked a definitive agreement pursuant to which TEGP will acquire the approximately 47.6m TEP common units held by the public in a taxable stock-for-unit merger transaction at a ratio of 2.0 TEGP class A shares for each outstanding TEP common unit.

The merger agreement has been unanimously approved by the board of directors of TEGP's general partner, the conflicts committee of the board of directors of TEP's general partner and the board of directors of TEP's general partner.

Subject to customary approvals and conditions, the merger is expected to close by the end of 2Q18.

Under the terms of the merger agreement, TEGP will acquire the approximately 47.6 m TEP common units held by the public at a fixed exchange ratio of 2.0 TEGP class A shares for each outstanding common unit.

As a result of the proposed transaction, the TEP incentive distribution rights will be cancelled, the TEP common units will no longer be publicly traded and 100% of the equity interests of TEP will be owned by TEGP's subsidiary, Tallgrass Equity, LLC.

In the proposed transaction, TEGP will issue an aggregate of approximately 95.2m class A shares to former TEP common unitholders, representing approximately 62.1% of the outstanding class A shares of TEGP following the transaction.

The revolving credit facilities of TEP and Tallgrass Equity, and the senior notes of TEP are expected to remain outstanding following the merger.

Assuming the merger closes on or before the record date for 2Q18 dividend, former TEP unitholders holding TEGP class A shares on the record date would be entitled to receive the 2Q18 dividend on the TEGP class A shares they receive in the merger in accordance with TEGP's agreement of limited partnership.

Completion of the merger is subject to customary closing conditions, including the approval by holders of a majority of the outstanding TEP common units, including common units owned by Tallgrass Equity, and the expiration or termination of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act.

As part of the transaction, TEGP and certain of its subsidiaries entered into a support agreement agreeing to vote their approximately 25.6m TEP common units (representing approximately 35% of the total outstanding TEP common units) in favor of the merger.

The board of directors of TEGP's general partner has declared a quarterly cash dividend of USD 0.4875 per class A share for 1Q18, or USD 1.95 on an annualised basis.

This represents a 32.7% sequential increase from the fourth quarter 2017 dividend of USD0.3675 per class A share and an increase of 69.6% from 1Q17 dividend of USD 0.2875 per class A share.

It is TEGP's 11th consecutive increase since its May 2015 initial public offering.

The board of directors of TEP's general partner declared a quarterly cash distribution of USD 0.975 per common unit for the first quarter of 2018, or USD3.90 on an annualized basis.

This represents a sequential increase of 1% from the fourth quarter 2017 distribution of USD 0.965 per common unit and an increase of 16.8 % from 1Q17 distribution of USD 0.835 per common unit.

It is TEP's 19th consecutive increase since its May 2013 initial public offering.

The TEGP and TEP quarterly distributions for 1Q18 will be paid on 15 May 2018, to shareholders and unitholders of record as of the close of business on 30 April 2018.

Tallgrass Energy is a family of companies that includes publicly traded partnerships Tallgrass Energy Partners, LP (NYSE: TEP) and Tallgrass Energy GP, LP (NYSE: TEGP).

Operating across 11 states, Tallgrass is a growth-oriented midstream energy operator with transportation, storage, terminal, water, gathering and processing assets that serve some of the nation's most prolific crude oil and natural gas basins.

Barclays acted as advisor to TEGP and Evercore Partners acted as advisor to the TEP conflicts committee. Baker Botts L.L.P. served as legal counsel to TEGP and Bracewell LLP served as legal counsel to the TEP conflicts committee.

Country: USA

Sector: Petroleum/Natural Gas/Coal

Target: Tallgrass Energy Partners

Buyer: Tallgrass Energy GP


Deal size in USD: 2.78bn

Type: Corporate Acquisition

Financing: Stock

Status: Agreed

Buyer advisor: Barclays , Baker Botts ,

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Publication:M & A Navigator
Date:Jun 26, 2018
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