Targa Resources For Supercharged MLP Dividend Growth And No Tax Headaches
Tim Plaehn • 15 Comments
Tim Plaehn • 15 Comments
Nov. 3, 2015, 3:27 PM
- Targa Resources (TRGP -13.6%) plunges after announcing the acquisition of its Targa Resources Partners (NGLS -2.1%) infrastructure MLP at an 18% premium.
- According to Amey Stone of Barron's, some investors say the parent company stands to lose the valuable incentive distribution payments it garnered from its MLP, whose units have turned lower heading into the close.
- For TRGP, the general partner, "it’s silly to give up the incentive distribution rights,” portfolio manager Jay Hatfield tells Barron’s, “but this is a way for them to fix the problem that NGLS was growth-challenged.”
- TRGP CEO Joe Bob Perkins says that by simplifying its structure, lowering its cost of capital, and increasing its retained cash flow, the company "will be better positioned to continue to invest in high-return growth projects that will drive dividend growth beyond 2016."
- The sale is a taxable event for NGLS unitholders, who must vote to approve the deal.
Nov. 3, 2015, 7:57 AM
- Targa Resources (NYSE:TRGP) agrees to acquire the common units of Targa Resources Partners (NYSE:NGLS) it does not already own, in a deal that values NGLS at ~$6.67B.
- TRGP, which has an ~8.8% stake in NGLS, is offering at a ratio of 0.62 TRGP common shares per common unit of NGLS; the implied unit price represents an 18% premium to its volume-weighted average price during the 10 previous trading days.
- Following the deal, TRGP expects dividend growth of 15% for 2016 and greater than 10% compound annual dividend growth through 2018.
- Also: Targa Resources Partners misses by $0.08, misses on revenue
Jun. 22, 2015, 3:30 PM
- Williams Cos. (WMB +23.8%) must either show its ability to stand on its own merit or accept a better takeout offer, analysts say after the company rejected a $48B buyout bid from Energy Transfer Equity (ETE -3.8%).
- Analysts suggest that given the limited number of potential buyers, ETE stands a good chance of eventual success, perhaps after raising its offer; Raymond James analyst Darren Horowitz, for one, expects a higher offer to come in, since pipelines remain a coveted, high-value infrastructure that is attractive to own even though oil and gas prices have plunged.
- Jefferies' Christopher Sighinolfi says disclosing the bid was a "defensive move" by WMB, and says he is waiting to learn of WMB's timetable for completing its strategic review.
- Argus says WMB management has demonstrated its ability to create shareholder value through both acquisitions and divestitures; the firm believes that the rejection of ETE's all-stock offer is prudent, and that ETE will need to raise its offer if it wishes to pursue the deal (Briefing.com).
- While WMB surges, Williams Partners (WPZ -6.9%) is sharply lower, since ETE's offer was contingent on the termination of WMB's pending absorption of WPZ.
- Analysts say other companies that run big pipelines may be merger candidates, including Oneok (OKE, OKS) and regional specialists such as Targa Resources (TRGP, NGLS).
May 13, 2015, 3:49 PM
- Energy MLPs are trading with mixed results, which is not in line with an analyst's expectation that several names in the space may be outperformers today after Williams Cos. (WMB +6.2%) agreed to buy Williams Partners (WPZ +22.7%).
- In an earlier note to investors, Credit Suisse named Plains GP Holdings (PAGP +1%), Targa Resources (TRGP +1.1%), NuStar GP Holdings (NSH -0.1%) and Western Gas Equity (WGP -0.7%) as MLPs that could climb on the news.
- Meanwhile, Wells Fargo says the deal is positive, since it reduces the WMB's cost of capital, will immediately increase its profits, and enhances its dividend growth outlook.
- Among major energy MLPs: EPD -1.5%, ETP +0.9%, PAA +0.2%, EEP -0.2%, MWE +2.2%, MMP -0.3%.
Oct. 13, 2014, 7:58 AM
- Targa Resources Partners (NYSE:NGLS) and Targa Resources (NYSE:TRGP) agree to acquire Atlas Pipeline Partners (NYSE:APL) and Atlas Energy (NYSE:ATLS) for $5.8B, including $1.8B of debt.
- Prior to Targa's acquisition of ATLS, ATLS will spin off its non-midstream assets; after giving effect to the spinoff, ATLS assets will solely comprise its general partner and incentive distribution rights interests in APL and 5.8M APL common units.
- The combination creates one of the largest diversified MLPs on an enterprise value basis, bringing Atlas' positions in the Woodford/SCOOP, Mississippi Lime and Eagle Ford and additional Permian assets to Targa's existing Permian, Bakken, Barnett and Louisiana Gulf coast operations.
- ATLS +14.1%, APL +12.8% premarket.
Jun. 20, 2014, 7:20 AM
- Targa Resources (TRGP) confirmed high-level preliminary discussions on a sale to Energy Transfer Partners (ETP), but says the talks ended without any deal. There are no assurances talks could resume.
- TRGP -13.7%, NGLS -9.1%, RGP +1%, ETE +0.5% premarket.
- Previously: Bloomberg: Energy Transfer near deal to buy Targa Resources
Pro-Targa Resources Corp. provides midstream natural gas and natural gas liquids services. The company engaged in the business of gathering, compressing, treating, processing, and selling natural gas and storing, fractionating, treating, transporting, and selling NGLs and NGL products. It also... More
Industry: Gas Utilities
Country: United States
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