Dallas, Texas 07/13/2015 (Financialstrend) – MPLX LP (NYSE:MPLX) and Markwest Energy Partners LP (NYSE:MWE) have announced a Definitive Agreement to Merger and become a single entity, and a subsidiary of MPLX. The transaction will result in an enterprise value of $20 billion it is estimated. In a statement, Chairman and Chief Executive Officer of MPLX, Gary R. Heminger noted that the merger between the two companies is strategic, leading to the creation of the large-cap MLP which is diversified and holds exceptional growth opportunity. The benefits of such a merger are in the evolution of a platform which hosts the combined partnership to ‘grow distributable cash flow’ as well as helps in bringing ‘significant long-term value for the unitholders,’ he added.
The value of the combined company is in its diverse and complementary asset base, claim the two stakeholders of the merger. Their combined assets will span ‘multiple segments of the hydrocarbon value chain,’ it is claimed.
Increased presence in Marcellus Utica Shales
The merger would allow MarkWest to increase its midstream presence in shales at Marcellus as well as Utica, with its range of additional dynamic midstream projects. The benefit lies in the ability of the producer customers to increase the value of their growing production in these shale regions.
The terms of the merger will lead to the creation of the fourth-largest company, in terms of the market capitalization. Valued at $21 billion this Master Limited Partnership (MLP) is expected to post ’25% compound annual distribution growth rate,’ by the year 2017. The transaction will be of unit-for-unit, which is likely to be tax-free. The agreement will also include single cash payment to unit holders of MarkWest.
MarkWest, post the transaction, will be part of MPLX, with its headquarters at Denver, Colorado, and will have Semple as the Vice Chairman of MPLX LP (NYSE:MPLX).