Enterprise to Buy Teppco for $3.3B in Stock

The deal creates an enormous transportation and storage network and will lead to $20 million in savings, the companies said. Enterprise will bring together the oil and gas operations of Texas billionaire Dan Duncan, whose Enterprise GP Holdings (EPE Quote) owns the general partners that control both Enterprise and Teppco.

Enterprise and Teppco are both master limited partnerships, or MLPs, which trade publicly but don't pay corporate income taxes. They rely on assets that generate cash flow -- in this case pipelines and storage facilities -- and distribute profits to shareholders.

Teppco shareholders will receive 1.24 Enterprise common shares for each Teppco share, a 14.5% premium to the initial offer made by Enterprise on March 9.

Teppco Partners LP and its general partner, Texas Eastern Products Pipeline Co. LLC, will become wholly owned subsidiaries of Enterprise. Teppco said its shareholders should benefit from the combination through a lower cost of capital and improved access to capital markets.

Teppco shares rose 5%, or $1.43, to close at $30.12 Monday. Enterprise shares fell 33 cents, or 1.3%, to $24.96.

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AP Business Writer Deborah Jian Lee in New York contributed to this report.