Penn Virginia Resource Partners, L.P. (“PVR”) (NYSE: PVR) and Penn Virginia GP Holdings, L.P. (“PVG”) (NYSE: PVG) today announced a definitive agreement that would result in the merger of the two partnerships. The merger transaction would be completed with 100 percent equity consideration and would result in PVR owning its general partner, the cancellation of PVG’s incentive distribution rights and the cancellation of the PVR limited partnership units owned by PVG. Under the terms of the merger agreement, PVG unitholders would receive 0.98 PVR limited partnership units in exchange for each PVG limited partnership unit owned at closing. The merger transaction would result in approximately 38.3 million additional limited partnership units being issued by PVR and the cancellation of approximately 19.6 million PVR limited partnership units owned by PVG. The terms of the merger agreement were unanimously approved by the conflicts committee of PVR’s general partner, comprised solely of independent directors acting pursuant to a delegation of authority from the full board of directors, and unanimously approved by the conflicts committee of the board of directors of PVG’s general partner, comprised solely of independent directors acting pursuant to a delegation of authority from the full board of directors. The terms of the merger also were approved by all members of the boards of directors of PVR’s general partner and PVG’s general partner other than William Shea, the chief executive officer of each of PVR and PVG, who recused himself from the votes of the full boards in light of his roles at the two partnerships.
“We are pleased with the agreement of the boards of directors of PVR and PVG to merge the partnerships,” Mr. Shea said. “We think that the lower cost of capital that is expected to result from the merger, and the simplified partnership structure, will position PVR to take advantage of accretive market opportunities and grow our quarterly distribution. The current management team, which will remain in place, is excited about the prospects for PVR following the merger, and we believe this transaction will be beneficial to the unitholders of both PVG and PVR,” added Mr. Shea.