Kinder Morgan-El Paso deal clears legal hurdle

HOUSTON – March 1:  Kinder Morgan Inc. cleared a legal hurdle in its $21 billion acquisition of El Paso Corp., combining the two largest natural gas pipeline operators in North America, after a Delaware judge refused to block the sale.

But the judge admonished some of the participants in the deal, which included Goldman Sachs Group Inc, whom disgruntled El Paso shareholders accused of a conflict of interest that they said resulted in undervaluing El Paso’s shares.

“I reluctantly deny the plaintiffs’ motion for a preliminary injunction,” Delaware Chancery Court Judge Leo Strine wrote on Wednesday.

“El Paso stockholders should not be deprived of the chance to decide for themselves about the merger, despite the disturbing nature of some of the behavior leading to its terms.”

The deal is expected to close in the second quarter, the companies have said. El Paso shareholders are scheduled to vote on the proposed acquisition on March 6.

Kinder Morgan has already reached an agreement to sell El Paso’s exploration and production assets for $7.15 billion to a private consortium led by Apollo Global Management LLC.