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Kinder Morgan Absorbs Three Firms in Deal Worth $71 Billion

Buyout second-largest in history of U.S. energy industry, after Exxon-Mobil merger.


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Houston-based Kinder Morgan, Inc. has announced it’s buying out three companies it controls indirectly, in a deal worth $71 billion.

Under the terms of the deal, Kinder Morgan will acquire Kinder Morgan Energy Partners, Kinder Morgan Management, and El Paso Pipeline Partners. The energy infrastructure giant will pay $40 billion in stock and $4 billion in cash to acquire all outstanding shares of the three firms. It will also assume $27 billion in debt.

“We believe that at close, we will have an enterprise value of this company of about $140 billion — $100 billion in equity and $40 billion in debt — which will make us the third-largest energy company of any kind in North America,” said CEO Richard Kinder in a conference call with investors.

The acquisition will be the second-largest in the history of the U.S. energy industry, topped only by Exxon’s 1999 takeover of Mobil.

The consolidation will open the door for Kinder Morgan to expand further. “Because they won’t be a master limited partnership anymore, they can buy oil and gas in the ground,” says Claire Poole, a Houston-based writer with financial news service, The Deal. “I mean, they’ve missed out on a lot of opportunities, because they were somewhat limited in the types of assets that they could acquire and operate.”

Pending regulatory approval, the takeover is expected to close by the end of the year.

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media's coverage of national, state, and local elections. He also reports on major policy issues before the Texas Legislature and county and city governments across Greater Houston. Before taking up his current post, Andrew spent five years as Houston Public Media's business reporter, covering the oil...

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