Kinder Morgan Acquires El Paso

October 17 00:00 2011

NEW YORK, October 17 ( – Kinder Morgan (NYSE: KMI) plans to buy El Paso Corp (NYSE: EP) for $21.1 billion, which is the biggest energy industry deal in more than a  year.

The acquisition will fortify Kinder Morgan’s position as a major player in the US gas industry, thus creating the largest natural gas pipeline network in the US. Kinder Morgan said,” The cash and stock offer is valued at $26.87 per El Paso share or 37 percent more than the Oct. 14 closing price.”

The acquisition will turn more than double the size of its pipeline network; the new pipeline system would stretch 80,000 miles and providing infrastructure to support growing production from new fields to new markets. If the deal materializes, Kinder Morgan will become the largest transporter of gasoline, diesel, and other petroleum products. Moreover, it will become the biggest independent owner and operator of petroleum storage terminals.

According to Kinder Morgan, the agreement will increase the Kinder Morgan’s shareholder value through increased cash flow and future growth possibilities. In addition, they expect a boost in dividends and result in $350 million as cost savings. The Board of Directors of both the companies have approved the acquisition and will close by the second quarter of next year.