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PAA Natural Gas Storage Announces Agreement To Merge With Plains All American Pipeline

Stocks in this article: PAA PNG

PAA Natural Gas Storage, L.P. (NYSE: PNG) today announced that it has entered into a definitive agreement and plan of merger with Plains All American Pipeline, L.P. (the “Merger Agreement”) that provides for a merger whereby PNG will become a wholly-owned subsidiary of Plains All American Pipeline, L.P. (“PAA”) through a unit-for-unit exchange (the “Merger”). Under the terms of the Merger Agreement, PNG’s public unitholders will receive 0.445 common units of PAA per PNG common unit surrendered pursuant to the Merger Agreement, plus cash in lieu of any fractional common units of PAA otherwise issuable in the Merger.

The transaction is expected to result in approximately 14.7 million additional common units being issued by PAA. The terms of the Merger Agreement were approved by the Conflicts Committee of the board of directors of the general partner of PNG (the “Conflicts Committee”), which negotiated the terms on behalf of PNG. The Conflicts Committee is comprised solely of independent directors. In addition, Evercore acted as financial advisor to the Conflicts Committee and delivered a fairness opinion to the Conflicts Committee in connection with the transaction.

The closing of the Merger is subject to the satisfaction of certain conditions, including the approval of the Merger and the Merger Agreement at a special meeting of unitholders by the affirmative vote of holders of a majority of the outstanding PNG common units (including the PNG common units held by PAA) voting as a separate class and the affirmative vote of holders of a majority of PNG’s outstanding subordinated units voting as a separate class. PAA owns 100% of the membership interests in the general partner of PNG, 100% of the outstanding subordinated units of PNG and approximately 46% of the 61.2 million outstanding common units of PNG. Pursuant to the Merger Agreement, PAA has agreed to vote its common units and subordinated units in favor of the Merger. The parties anticipate that the Merger will close in the latter half of the fourth quarter of 2013, and that the previously announced quarterly distribution of $0.3575 per PNG common unit payable to holders of record of such units on November 1, 2013 will be paid on November 14, 2013 as scheduled.

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