Enterprise to Buy Teppco for $3.3B in Stock

By John Porretto

HOUSTON -- Enterprise Products Partners (EPD Quote) will acquire Teppco Partners (TTP Quote) in a sweetened all-stock deal worth about $3.3 billion, forming what the two pipeline operators say will be the nation's largest publicly traded energy partnership.

The new partnership, announced Monday and expected to close by year's end, will have operations throughout the U.S., on the east, west and gulf coasts.

Keeping the name Enterprise Products Partners, it will own nearly 48,000 miles of crude and natural gas pipelines; 200 million barrels of storage capacity for natural gas liquids, crude and refined products; and 27 billion cubic feet of natural gas storage capacity.

It also will control one of the largest U.S. terminals for natural gas liquids in the Houston Ship Channel.

In a conference call Monday to discuss the deal, Randy Fowler, chief financial officer for Enterprise, said the combined entity will have an equity market capitalization of about $14 billion. He said the combination creates a portfolio of largely fee-based operations with a broad geographic footprint.

"The larger scale translates into more sources of cash flow," Fowler said.

Teppco, which had seen its stock value tumble along with the price of oil and natural gas, had rejected a bid for $2.8 billion earlier this year. The new offer represents a 9.3% premium to Teppco's closing price Friday.

The combined company will provide some stability in what has become an extraordinarily volatile oil and gas market.

"We're largely a fee-based company," said Rick Rainey, a spokesman for both Enterprise and Teppco. "Whether the price of gasoline is $2 at the pump, or $4 at the pump, we get the same amount of money to ship it."