(Updates with proposed Southern Union acquisition in fourth paragraph.)
Oct. 17 (Bloomberg) -- AmeriGas Partners LP, the largest retail propane distributor, will buy the propane operations of Energy Transfer Partners LP for $2.8 billion, the companies said today.
AmeriGas will pay $1.5 billion in cash, $1.3 billion in common stock and assume $71 million in debt in Energy Transfer’s two propane units, Heritage Operating LP and Titan Energy Partners LP, Energy Transfer said in a statement today.
The transaction is expected to close by early 2012. Energy Transfer will own about 34 percent of AmeriGas common stock, which it has agreed to hold until at least 2013, according to the statement.
Energy Transfer Equity LP, which is the general partner for Energy Transfer Partners and owns 24 percent of its shares, has agreed to buy Southern Union Co. for $5.1 billion after a bidding war with Tulsa, Oklahoma-based Williams Cos.
Selling propane assets from its limited partnership will help Dallas-based Energy Transfer Equity raise cash to fund its acquisition of Houston-based Southern Union, said Ted Harper, who helps oversee about $6.8 billion in assets at Frost Investment Advisors LLC in Houston.
With the purchase from Energy Transfer, King of Prussia, Pennsylvania-based AmeriGas will add more than 1 million retail propane customers and more than 500 million gallons to its propane operations, according to an AmeriGas statement.
JPMorgan Chase & Co. advised AmeriGas on the transaction, and Shearman & Sterling LLP acted as legal adviser.
(The companies have scheduled a conference call for 3:30 p.m. New York time. A live webcast will be available at www.amerigas.com.)
--Editors: Susan Warren, Jasmina Kelemen
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