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Kinder Morgan (KMP) agrees to acquire Copano Energy (CPNO) for $3.2B in stock, or $5B including...

Kinder Morgan (KMP) agrees to acquire Copano Energy (CPNO) for $3.2B in stock, or $5B including debt, with Kinder's offer of $40.91 a share representing a 23.5% premium to Copano's close yesterday. The deal will provide Kinder with natural gas assets in Texas, Oklahoma and Wyoming, adding 6,900 miles of pipelines to the company's 46,000 existing miles.  (PR)
Comments (21)
  • Dr. Jackpot
    , contributor
    Comments (48) | Send Message
     
    After reading the referenced press release I'm confused. Does this mean KMP holders will receive an increased distribution due to this deal or a decreased distribution to help pay for the acquisition?
    30 Jan 2013, 07:41 AM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Modest accretion to KMP shareholders in 2013; ~$0.10/unit accretion in 2014 and thereafter. That means you will receive $10.00 for each 100 shares for the privilege of letting KMI set up the deal.
    1 Feb 2013, 05:29 PM Reply Like
  • CaptainDK
    , contributor
    Comments (6) | Send Message
     
    It probably means they will come out with a new offering as they have in the past diluting current stockholders value.
    30 Jan 2013, 07:46 AM Reply Like
  • rdy4trvl
    , contributor
    Comments (30) | Send Message
     
    I wasn't sure how to reply so pick the best of the three:

     

    1) Oh no, more dilution! Soon they'll have diluted the stock price to $100/share
    2) Sell, sell, sell.....to me, right when the announce the new offering.
    3) Buy Herbalife....the stock and product, they need more distributors
    30 Jan 2013, 11:21 AM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Yeah you are right rdy4trvl, the next days open would have provided an opportunity.
    1 Feb 2013, 05:31 PM Reply Like
  • Larry Smith
    , contributor
    Comments (2485) | Send Message
     
    For holders of KMI, I found this comment in the press release rather odd. "The general partner of KMP, Kinder Morgan, Inc. (NYSE: KMI), has agreed to forego a portion of its incremental incentive distributions in 2013 in an amount dependent on the time of closing. Additionally, KMI intends to forgo $120 million in 2014, $120 million in 2015, $110 million in 2016 and annual amounts thereafter decreasing by $5 million per year from this level"

     

    Wonder why the GP would forego what contratually they are entitled to.
    30 Jan 2013, 09:23 AM Reply Like
  • bigbenorr
    , contributor
    Comments (761) | Send Message
     
    Whats good for the goose is good for the gander....
    30 Jan 2013, 10:05 AM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Larry the GP has to set up these deals to be good for shareholders of the MLPs, or we will not pay them 50% of the profits, plus profits on the many shares that they already own. They are forgoing incentive rights so that shareholders get 10 cents a share until, the merger earns enough to pay the 10 cents and pay KMI its full cut. After that we split 50% / 50%.
    1 Feb 2013, 05:35 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Good point Bigbenorr, KMI owns KMP. So they get the money anyway. They just don't get to count it twice. Once when the pay KMP ($0.10) then again when KMP pays KMI ($0.10 + $0.10 = $0.20 in Kinder distributions).
    1 Feb 2013, 05:38 PM Reply Like
  • Dr. Jackpot
    , contributor
    Comments (48) | Send Message
     
    I still don't understand it but I see the stock is down sharply. Does anybody know why or is this just confusion in control. Looks to me like a good deal actually.
    30 Jan 2013, 11:33 AM Reply Like
  • Larry Smith
    , contributor
    Comments (2485) | Send Message
     
    Most of the time when a company buys someone the acquiring company stock price goes down. Investors sell because they fear money is being used for an acquisition will increase debt and/or take money away that could be used for dividends or stock buybacks. The other concern is the acquiring company may issue more shares to pay for the purchase which will dilute current shareholders. I believe dilution is the concern with this transaction as Kinder has stated the transaction will be distribution positive.

     

    In the long run the deal is a positive, most investors are short term focused.
    30 Jan 2013, 12:05 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Copano Acquisition was temporally bearish due to the near-term dilution from more stock.
    1 Feb 2013, 05:41 PM Reply Like
  • Dr. Jackpot
    , contributor
    Comments (48) | Send Message
     
    Makes sense to me.
    30 Jan 2013, 12:51 PM Reply Like
  • dividend_growth
    , contributor
    Comments (2883) | Send Message
     
    KMI is up, KMP is down, so always side with the GP.
    30 Jan 2013, 02:37 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Richard Kinder did not purchase any KMI during 2012
    1 Feb 2013, 05:45 PM Reply Like
  • Stew Williams
    , contributor
    Comment (1) | Send Message
     
    What does this mean for Capano shareholds? Should they sell shares at this higher price or wait and take stock from KMI?
    30 Jan 2013, 06:49 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Take the deal and buy KMR with the proceeds.
    1 Feb 2013, 05:45 PM Reply Like
  • raykrv6a
    , contributor
    Comments (2615) | Send Message
     
    I'm a little overweight. Bought KMI and then added KMR. Holding both for long term investment.
    1 Feb 2013, 06:02 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    The acquisition will be immediately accretive to KMI. $0.10 per unit accretive from 2014-2019 for KMP
    1 Feb 2013, 06:04 PM Reply Like
  • raykrv6a
    , contributor
    Comments (2615) | Send Message
     
    Thanks, good to know.

     

    I bought both a while back and in the green, so I'm OK.
    1 Feb 2013, 06:09 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Copano Acquisition Analyst Conference slide show:

     

    Richard Kinder: http://bit.ly/11v7TLC
    1 Feb 2013, 06:46 PM Reply Like
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