Bloomberg News

Kinder Morgan to Buy El Paso for $38 Billion Including Debt

October 16, 2011

(Updates with terms in starting in the second paragraph.)

Oct. 16 (Bloomberg) -- Kinder Morgan Inc. agreed to buy El Paso Corp. for about $38 billion in cash, stock and assumed debt, creating the largest U.S. natural gas pipeline network.

The offer is valued at $26.87 per El Paso share, or 37 percent more than their Oct. 14 closing price, Houston-based Kinder Morgan said in a statement today. The offer is comprised of $14.65 in cash, 0.4187 shares of Kinder Morgan, and 0.64 Kinder Morgan warrants, the statement said.

“This once in a lifetime transaction is a win-win opportunity for both companies,” Richard Kinder, who is chairman and chief executive officer of Kinder Morgan and will hold those posts in the combined company, said in the statement. “The transaction is expected to produce immediate shareholder value (upon closing) through strong cash flow accretion and offers significant future growth opportunities.”

Kinder Morgan intends to sell the exploration and production assets of El Paso, the statement said. The transaction is expected to close in the second quarter of 2012, creating the fourth-largest energy company in North America, according to the statement.

The he combination will result in a cost savings of about $350 million a year, the statement said.

--Editors: Kevin Miller, Sylvia Wier

To contact the editor responsible for this story: Dan Hart at dahart@bloomberg.net; Alexis Leondis in New York at aleondis@bloomberg.net

To contact the editor responsible for this story: Kevin Miller at kmiller@bloomberg. net


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