Southcross, TexStar Ink $450M merger

NEW YORK (The Deal) -- Two private equity-backed energy firms are set to combine assets in a deal that the companies said would create a midstream powerhouse serving the Eagle Ford region of south Texas.

Southcross Energy Partners has entered into a definitive agreement to combine with TexStar Midstream Services in a deal that would value a collection of TexStar assets at about $450 million. Terms call for newly formed Southcross Holdings to own equity interests in Southcross Energy and TexStar assets, with private equity firms EIG Global Energy Partners, Charlesbank Capital Partners and Tailwater Capital each indirectly owning about a third of Southcross Holdings.

San Antonio-based TexStar is a privately held gas gathering and processing partnership. Southcross will pay $180 million in cash and 14.633 million newly issued common units for the collection of TexStar assets, creating an Eagle Ford-focused midstream operation with four processing plants, three fractionation facilities and about 3,700 miles of pipeline.

Southcross Energy, of Dallas, is an existing portfolio company of Charlesbank with assets in south Texas, Mississippi and Alabama. TexStar is a portfolio company of EIG Global and Tailwater.

Southcross chairman and CEO David Biegler in a statement said the assets to be combined are highly complementary and should help fuel growth.

"The transactions create a premier, fully integrated Eagle Ford-focused midstream company," Biegler said. "The enhanced asset base and potential for further drop-downs, we believe, give us a clear path to generate significant distribution and value growth for our unitholders."

Post-deal, Biegler would be chairman and CEO of Southcross, with TexStar's CEO to become an executive vice president at the combination.

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