ONEOK, a major U.S. pipeline operator, announced two strategic acquisitions worth $5.9 billion from infrastructure investor GIP, enhancing its presence in key U.S. oil and gas regions, including the Permian Basin, mid-continent, North Texas, and Louisiana.
In the first deal, ONEOK will acquire GIP’s 43% stake in EnLink Midstream for $14.90 per unit, totaling about $3.3 billion in cash. This price represents a 12.8% premium over EnLink’s closing market price on August 27. Additionally, ONEOK will buy GIP’s full interest in EnLink’s managing member. In the second deal, ONEOK will purchase GIP’s equity interests in Medallion Midstream, a crude gathering and transportation system in the Permian’s Midland Basin, for $2.6 billion in cash.
ONEOK CEO Pierce Norton II expressed enthusiasm about expanding in the Permian Basin, a key driver of U.S. oil and gas growth. Following the company’s recent acquisition of Magellan Midstream Partners for $18.8 billion, these deals aim to strengthen ONEOK amid fluctuating U.S. natural gas prices.
The company expects the acquisitions to immediately enhance its earnings and free cash flow, supporting its $2 billion share repurchase program. ONEOK also projects synergies between $250 million and $450 million over the next three years. The deals are expected to close early in the fourth quarter, with financing commitments of up to $6 billion from JPMorgan Chase and Goldman Sachs.