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.
HOUSTON ― Kinder Morgan Inc’s. planned takeover of El Paso Corp. in a $21 billion deal that would create the largest oil and gas pipeline company in North America will receive regulatory clearances because there is little asset overlap, Rich Kinder, Kinder Morgan’s chief executive, said on Monday.
“We certainly anticipate we will obviously have to comply with the regulator, in this case, the (U.S. Federal Trade Commission), and we’ll work with them to satisfy whatever their concerns are; but we don’t see that as a major obstacle and we do expect to close, we’re thinking, in the second quarter of next year,” Kinder told investors on a conference call.
As part of the planned deal, Kinder plans to sell El Paso’s exploration and production assets. That deal is expected to close in the second quarter and proceeds will be applied to acquisition debt, Kinder told investors.
El Paso’s exploration and production business, which includes assets in the hot Eagle Ford Shale in South Texas, is valued at $9.2 billion, according to analysts at Houston investment energy bank Tudor Pickering Holt & Co.
The two companies do have some pipelines that overlap in the U.S. Rocky Mountains, Kinder said, adding that the company would work with regulators on the issue.
Shares of El Paso climbed 24 percent to $24.25 in morning New York Stock Exchange trading. Shares of Kinder Morgan climbed 8 percent to $29.13.