Kinder Morgan Energy Partners, L.P. (NYSE: KMP), today announced that it has entered into a purchase and sale agreement with Tallgrass Energy Partners, LP (Tallgrass) to sell Kinder Morgan Interstate Gas Transmission (KMIGT), Trailblazer Pipeline Company, the Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming and the company’s 50 percent interest in the Rockies Express Pipeline (REX). Tallgrass is owned by The Energy & Minerals Group, Kelso & Company and the management team of Tallgrass, including CEO David G. Dehaemers, Jr. KMP will receive approximately $1.8 billion in cash from the transaction. Including the proportionate amount of REX debt, this amount is equivalent to a value of $3.3 billion. The transaction, which is subject to Federal Trade Commission (FTC) approval, is expected to close in the fourth quarter. Barclays and Citi acted as financial advisors to KMP on this transaction.
In March 2012, Kinder Morgan, Inc. (NYSE: KMI) announced that it had reached an agreement with the FTC to divest certain KMP assets in the Rockies in order to obtain regulatory approval of its acquisition of El Paso Corporation, which closed in May. “As I previously stated, we would prefer to keep all of these assets, but we anticipated divestiture of certain assets in the Rockies would be necessary to obtain FTC approval,” said Chairman and CEO Richard D. Kinder.
“I want to thank the employees involved in this transaction for their diligence and hard work. It is very gratifying that Tallgrass is interested in retaining the employees of the entities that will be divested,” Kinder said.
Mr. Dehaemers and an experienced management team have over 70 years of combined midstream energy experience. Mr. Dehaemers previously served as CFO and EVP of corporate development at Kinder Morgan from 1997 to 2003. He served as the EVP of corporate development at Inergy, LP from 2003 to 2007 and was one of the owners of Inergy, LP’s general partner, NRGP, when it went public in 2005. In his career he has led more than $14 billion of midstream energy merger, acquisition and development opportunities.