FTC OK's Sale of Kinder Morgan, With Caveats

The FTC yesterday agreed to grant pipeline company Kinder Morgan conditional antitrust clearance to pursue its $22 billion sale to an investor group of which CEO Richard Kinder is a member. Kinder Morgan stockholders will receive $107.50 in cash per share, and the deal includes the assumption of $7 billion in debt. The FTC had questioned the involvement of investment firms Carlyle Group and Riverstone Holdings LLC on the grounds that they hold stakes in Magellan Midstream, a major competitor to Kinder Morgan in gasoline storage. It is requiring the two groups to cede control of Magellan to a third investor and remove their representatives from the company's board. The FTC's object is to prevent M&A activity among energy firms from artificially elevating gas prices for consumers. Kinder Morgan is aiming for a Q1 closing of the acquisition, but it might be delayed into Q2 on scheduling issues with the California Public Utilities Commission.

• Sources: Wall Street Journal, Reuters, MarketWatch, Press release
• Related commentary: Investors Watching Management-Led Buyouts, Kinder Morgan: The Path Not Taken By Enron, LBOs Making Executives Very, Very Rich
• Potentially impacted stocks and ETFs: Kinder Morgan Inc. (KMI). Competitors: TEPPCO Partners LP (TPP), Williams Companies Inc. (WMB). ETFs: Vanguard Mid-Cap Value ETF (VOE)

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