Oil and gas pipeline operator Kinder Morgan Inc. Monday said it had agreed to be bought and taken private for $15 billion in cash by an investor group that includes Chief Executive Richard Kinder.
The deal values Kinder Morgan at $107.50 per share, a 5.7 percent premium to the company's stock price of $101.70 at Friday's close. The investor group, which will also assume $7 billion of debt, in May had proposed to buy out Kinder Morgan for $100 a share.
The investor group includes Kinder Morgan management, Goldman Sachs Capital Partners, American International Group Inc., Carlyle Group and Riverstone Holdings LLC.
"We are proud to partner with this prominent group of private equity firms, all of which have proven records of success," said Richard Kinder.
Houston-based Kinder Morgan said the $107.50 price represented a premium of 27 percent over its closing stock price of $84.41 on May 26, the last trading day before the investor group made its initial proposal to take the company private.
Kinder Morgan said its board, on the unanimous recommendation of a special committee of independent directors, had approved the agreement and would recommend that stockholders vote for the merger.
CO-FOUNDER
Richard Kinder, who will continue as chairman and CEO after the transaction closes, will reinvest all of his 24 million shares in the company, which operates 43,000 miles of pipelines.
Kinder Morgan said it expected to complete the deal by early 2007, subject to stockholder and regulatory approvals.
The transaction will be financed through a combination of equity contributed by the investor group and debt financing provided by Goldman Sachs Credit Partners L.P. and affiliates of Citigroup Global Market Inc., Deutsche Bank Securities Inc., Wachovia Securities and Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley and Blackstone Group L.P. are financial advisors to the special committee.
Goldman Sachs & Co. is financial advisor to the investor group.
The investor group also includes Kinder Morgan co-founder Bill Morgan and board members Fayez Sarofim and Mike Morgan.