Kinder Morgan to Take Over El Paso for $21 billion

October 17 00:00 2011

New York, October 17 ( – Houston-based Kinder Morgan has entered into an agreement to buy El Paso Corp for $21.1 billion for creating the largest natural-gas pipeline network in the US. Out of this amount, $11.5 billion will be paid in cash that will be loaned by Barclays Plc. This will also be the energy industry’s biggest transaction in more than a year. Kinder Morgan’s cash and stock offer will be $26.87 per El Paso share, which is 37 percent more than the October 14 closing price.

The amalgamation of the companies will make them the biggest US pipeline operator, going ahead of Enterprise Products Partners LP with 67,000 miles (107,000 kilometers) of gas line to their credit. It will also give Kinder Morgan an important position in the U.S. gas industry that is providing the infrastructure for transporting the increasing amount of production from new fields to new markets.

Bill Herbert, an analyst at Simmons & Co. International in Houston said that CEO Richard Kinder believes that the need for pipelines will keep on growing. He added that “Rich Kinder continues to make history by shaping and redefining the North American energy landscape and he is, once again, likely making the wise bet.”

Kinder who will become the Chairman and CEO of the new company said that after the acquisition process is over, immediate shareholder value will be created because of the cash flow.