This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Kinder Morgan to Buy El Paso Corp. (Update1)

Updated from 5:08 p.m. EDT with deal details, background on Kinder Morgan's purchase of El Paso.

NEW YORK (TheStreet) -- Kinder Morgan (KMI) has agreed to buy El Paso (EP) for $21.1 billion in a cash and stock deal.

The transaction, which values El Paso at $38 billion including El Paso's outstanding debt, creates the largest network of natural gas pipelines in the U.S. and is the largest energy merger this year.

It's also the second largest takeover this year after AT&T's (T) $39 billion purchase of T-Mobile in March, although that deal has been blocked by the U.S. Department of Justice on antitrust concerns.

Kinder Morgan and El Paso announced the transaction in a news release Sunday.

> > Bull or Bear? Vote in Our Poll

The deal values El Paso shares at $26.87 each, a 37% premium to their closing price Friday of $19.59. It also represents the highest price for the company's stock since it went public in 2006.

Kinder Morgan will pay El Paso $14.65 a share in cash and will contribute its shares at a ratio of 0.41 and its warrants at a ratio of 0.64 to El Paso shares to assume all of its outstanding stock. The deal is expected to close in mid-2012 and will give Kinder Morgan shareholders a 68% ownership of the combined company; El Paso shareholders will own the remaining 32%.

"This once in a lifetime transaction is a win-win opportunity for both companies," Kinder Morgan founder and CEO Richard D. Kinder said in the news release. "The natural gas pipeline systems of the two companies are very complementary, as they primarily serve different supply sources and markets in the United States."

The combination will create the nation's largest natural gas pipeline and biggest independent transporter of petroleum.

It also will create the fourth largest energy company in the U.S., according to the news release.

As part of the merger, Kinder Morgan will sell El Paso's oil and gas exploration and production assets to help pay for the deal. It also expects the combination to boost shares immediately because of the cash flow of the combined companies.

Kinder Morgan also said it has a commitment from Barclays Capital (BCS) to raise the nearly $15 billion in funds required for the cash portion of the purchase.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,106.70 +29.83 0.17%
S&P 500 2,000.02 +2.10 0.11%
NASDAQ 4,570.6370 +13.29 0.29%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs