ONEOK Moves to Fully Acquire EnLink Midstream in Major Stock Transaction

ONEOK's Major Acquisition of EnLink Midstream

On November 24, 2024, ONEOK, Inc. (NYSE: OKE) revealed an agreement to acquire EnLink Midstream, LLC (NYSE: ENLC), targeting the remaining publicly held common units. This merger is set to transpire as a tax-free transaction valued at approximately $4.3 billion, primarily utilizing ONEOK common stock.

Transaction Details

The merger agreement specifies that each publicly held common unit of EnLink not already owned by ONEOK will convert into 0.1412 shares of ONEOK common stock. This exchange ratio corresponds to a valuation of $15.75 per EnLink unit, reflecting its market close price as of November 22, 2024. In total, ONEOK will issue about 37 million new shares, which represents around 6% of its total outstanding shares upon completion of the transaction.

The EnLink Board of Directors, specifically a designated Conflicts Committee of independent directors, conducted a thorough evaluation, consulting with independent legal and financial advisors. After careful consideration, they unanimously agreed that the transaction serves the best interests of EnLink and its public unitholders, subsequently recommending it for approval to the full board, which also unanimously endorsed the deal.

Next Steps and Expectations

Subject to customary closing conditions, the transaction is anticipated to finalize in the first quarter of 2025. It requires the approval of a majority of outstanding EnLink common unit holders, including those controlled by ONEOK—approximately 44% of the total units. Importantly, a vote from ONEOK shareholders is not necessary, and there aren't any additional regulatory approvals needed since ONEOK has previously filed under the Hart-Scott-Rodino Act in connection with acquiring a controlling interest in EnLink.

Pierce H. Norton II, president and CEO of ONEOK, expressed optimism regarding the merger, claiming that this strategic move is projected to be accretive to ONEOK shareholders while offering EnLink unitholders enhanced trading liquidity and attractive dividend yields. He emphasized that ONEOK aims to solidify its reputation in the energy infrastructure sector, aligning the merger with its long-term goals of expanding business and creating shareholder value.

Background on ONEOK and EnLink

ONEOK stands out as a key player in energy delivery, boasting a vast pipeline network over 50,000 miles that supports the transportation of essential products including natural gas, refined products, and crude oil. The company has established itself as one of North America's largest diversified energy infrastructure firms.

Conversely, EnLink Midstream, headquartered in Dallas, provides crucial midstream services, ensuring reliable natural gas, crude oil, and NGL transportation. EnLink's extensive operations span multiple production areas, striving for operational excellence and financial flexibility.

The integration of EnLink's operations into ONEOK is poised to enhance their combined service offerings and bolster market positions.

Conclusion

As ONEOK charts this ambitious course, stakeholders will watch for how this acquisition impacts both companies' operations, market competitiveness, and overall synergy. The coming months will be critical as the transaction gears up for its anticipated completion, marking a significant chapter in ONEOK's expansion narrative.