MPLX Energy Logistics Swallows Mark West - Wait For Gas And NGL Pricing To Firm Before Jumping In
Michael Fitzsimmons • 30 Comments
Michael Fitzsimmons • 30 Comments
MPLX Energy Logistics: An MLP Very Much Like 2014 #1 Performer Phillips 66 Partners
Michael Fitzsimmons • 16 Comments
Michael Fitzsimmons • 16 Comments
Dec. 1, 2015, 2:47 PM
- MarkWest Energy (MWE -4.8%) unitholders vote to approve a merger deal with MPLX (MPLX -13.6%), overcoming opposition from two MWE founders; the deal is now expected to be completed by Dec. 4.
- The agreement will make MWE, the second largest natural gas processor in the U.S., a subsidiary of Marathon Petroleum (MPC +0.9%) pipeline operator MPLX, and create one of the biggest MLPs.
- The overall value of the cash and stock deal originally was pegged at ~$15B in July but had fallen to ~$10B by mid-November amid plunging energy stock prices, when MPC increased the cash portion of the deal to $6.20/unit for MWE shareholders.
Nov. 20, 2015, 9:58 AM
- MarkWest Hydrocarbon founders John Fox and Brian O'Neill say they will vote against a merger of MarkWest Energy (MWE -1.2%) and MPLX (MPLX -2.1%).
- Fox already has expressed his views, and O'Neill now says he is in "100% agreement" with Fox, adding "MWE has spent more than $10B in capital expenditures over the previous five years, which means MPLX and its owner, Marathon Petroleum (MPC +0.5%), are merely refunding MWE's unitholders and leaving a small premium for their efforts."
- At the same time, MWE announces that the Glass Lewis and Egan Jones proxy advisory firms recommend shareholders vote for the merger.
- Earlier: MarkWest says ISS recommends investors vote for deal with MPLX (Nov. 19)
Nov. 18, 2015, 11:57 AM
- MarkWest Energy Partners (MWE +2.4%) says the ISS proxy advisory firm recommends MWE unitholders vote in favor of the combination of MWE with MPLX (MPLX -3.3%).
- The ISS recommendation cites "the premium to the unaffected price at announcement, the subsequent cash increases in the merger consideration, and the strategic advantages of the combination - including both the access to relatively more certain capital sources at a lower cost of capital and the ability to de-risk certain growth opportunities" with Marathon Petroleum (MPC +1.1%) as its parent.
- Separately, Kayne Anderson Capital Advisors discloses a 5.7% active stake in MWE.
Nov. 17, 2015, 8:24 AM
- Marathon Petroleum (NYSE:MPC) again raises the cash portion of its cash and stock offer for MarkWest Energy Partners (NYSE:MWE), hoping to clinch its proposed takeover.
- MPC, which has agreed to buy MWE through its MPLX pipeline unit, says it will now offer $6.20/unit, up from $5.21 offered last week.
- The latest offer, which MPC and MPLX say represents the best and final offer, nearly doubles the cash portion of the offer from the $3.37/unit offered in July when the deal was reached.
- MWE +2.7% premarket.
Nov. 12, 2015, 11:59 AM
- Former MarkWest Energy (MWE -5.1%) Chairman and CEO John Fox reaffirms his opposition to the company's proposed merger with MPLX (MPLX -1.2%), urging fellow unitholders to withhold their proxies or vote no.
- Fox says Marathon Petroleum's (MPC -2.2%) $1.84/unit cash increase "does not materially change the fundamentals of the deal. The revised $52.93/unit implied deal terms based on MPLX's closing price on Nov. 10 is still 33% below the initial implied deal terms outlined in July."
- Earlier: Former MarkWest CEO aims to stop merger with MPLX (Nov. 4)
Nov. 10, 2015, 5:34 PM
- Marathon Petroleum (NYSE:MPC) says it is raising the cash portion of its offer to buy MarkWest Energy Partners (NYSE:MWE) by $400M to $1.075B from $675M.
- MPC, which is seeking to acquire MWE through its MPLX pipeline unit, says it will now offer $5.21/unit in cash, up from the $3.37 it offered in July.
- MPC says MWE unitholders would continue to get 1.09 MPLX units for each share held, for total consideration of ~$52.93 per MWE common unit.
Nov. 4, 2015, 8:30 AM
- Former MarkWest Energy Partners (NYSE:MWE) CEO John Fox says he will oppose Marathon Petroleum's (NYSE:MPC) proposed $15.6B acquisition of the company through its MPLX pipeline unit.
- Fox, who owns 1.4M MWE units, writes in an open letter that MWE should remain a standalone company to avoid a significant cut in shareholder distributions, as cash available for distribution would be reduced by obligations to make incentive distribution payments to MPC.
- Also: MarkWest Energy Partners misses by $0.03, misses on revenue
Jul. 14, 2015, 2:42 PM
- MPLX (MPLX +2.8%) bounces back a bit after yesterday's 14.5% drop on news it was buying MarkWest Energy Partners (MWE +2%), as analyst commentary is mostly positive and the shares begin to look cheaper.
- Citi Research analyst Faisel Khan rates all the companies, including MPLX parent Marathon Petroleum (MPC +0.3%), with Buy ratings, as "the damage has been done" and MPLX units are cheap on its distribution target for next year; for MWE, Citi sees the possibility of another bid but that it would be difficult given the no-shop provision and $625M break-up fee.
- However, MPLX gets a negative review from Howard Weil, which downgrades shares to Sector Perform with a $65 price target, cut from $87, believing investors will re-rate their yield expectations on what is a much larger entity with less visibility into outer year growth and a slower growth trajectory beyond 2017 (Briefing.com).
Jul. 13, 2015, 6:57 PM
- U.S. midstream MLPs rallied today following the news that MarkWest Energy (NYSE:MWE) was acquired by MPLX (NYSE:MPLX), as the deal is seen as a validation of the long-term demand potential for U.S. natural gas liquids infrastructure despite current depressed prices.
- Among today's gainers in the group: GEL +3.7%, DPM +3.3%, OKS +2.6%, NGLS +2.5%.
- SunTrust's Tristan Richardson believes the deal is particularly bullish for Enterprise Products Partners (NYSE:EPD), since speaks to the long term potential for the NGL market and the buildout of NGL infrastructure to new sources of market demand, where EPD is a leader with significant organic growth opportunities.
- MPLX fell 14.5% today, as investors worry that adding a nat gas company to MPLX, which had been growing rapidly, could hurt growth and add more volatility to earnings; however, many analysts believe the deal is a safe bet for MPLX because the company is diversifying its sources of income to help it survive the ups and downs of the commodity cycles.
Jul. 13, 2015, 3:39 PM
- The big winner in MPLX's (MPLX -14.9%) takeover bid for MarkWest Energy (MWE +12.8%) is MPLX’s parent, Marathon Petroleum (MPC +7.7%), which contributed $973M of its own cash to seal the deal, according to Liam Denning of WSJ's Heard On The Street.
- While its shareholding in MPLX will drop to 21% on a pro forma basis, Denning says, MPC also will retain its GP units in the combined entity, which entitle it to a much larger share of cash distributions by MPLX - a common feature of MLPs that encourage rapid expansion, though one that has waned in recent years.
- MPC has a lot of assets to drop down to its MLP, and the acquisition will allow it to do so faster going forward since it will be a much bigger company, says InfraCap MLP ETF portfolio manager Jay Hatfield.
Jul. 13, 2015, 12:31 PM
- MarkWest Energy (MWE +11.7%) is up only ~12% after the company agreed to be acquired by MPLX (MPLX -16.8%) for a 32% premium, and MarketWatch's Philip Van Doorn believes the reason lies with the income objective of many MWE unitholders who do not like giving up their dividend yield; MPLX unitholders also hardly seem thrilled, sending shares down 17%.
- MWE’s most recent quarterly distribution was $0.91/share, equating an annual yield of 6.09%; a one-time cash payment of nearly a year’s worth of dividend income helps, but the explanation of the deal’s strengths by MPLX CEO Gary Henniger - who expects a "25% compound annual distribution growth rate for the combined entity through 2017, with a peer-leading growth profile thereafter" - clearly is not enough to convince MWE unitholders of the deal's merits, Van Doorn writes.
Jul. 13, 2015, 7:11 AM
- MPLX agrees to acquire MarkWest Energy Partners (NYSE:MWE) in a cash and stock deal valued at ~$20B, including ~$4.2B in debt.
- MWE unitholders will get 1.09 common units of MPLX and $3.37 in cash for every unit held, which works out to $78.64/unit, a 32% premium to MWE's Friday closing price.
- The deal would create the fourth-largest MLP, with a $21B market cap.