By RTT News,
July 24, 2014, 06:53:00 AM EDT
(RTTNews.com) - Breitburn Energy Partners LP ( BBEP ) and QR Energy, LP ( QRE ) announced Thursday the signing of a definitive merger agreement, under which Breitburn will acquire QR Energy in a unit-for-unit exchange implying a transaction value of approximately $3.0 billion.
The deal value includes QR Energy's existing net debt and outstanding Class C Convertible Preferred Units.
Under the deal terms, holders of QR Energy's Common and Class B units, including those issuable upon a change in control, will receive approximately 72 million Breitburn common units, or 0.9856 of a BBEP unit for each unit of QRE held.
The consideration to be received by QR Energy unitholders is valued at $22.48 per unit, based on Breitburn's closing price of $22.81 on July 23. The per share price represents a 19 percent premium to QRE's closing price of $18.87 on July 23.
The companies expect the deal to be tax-free to QR Energy's unitholders other than the holders of QR Energy Class C Convertible Preferred Units who will receive an aggregate of $350 million cash at closing.
The transaction has been unanimously approved by the boards of directors of Breitburn and QR Energy.
Certain QR Energy unitholders owning approximately 37 percent of the votes of the outstanding QRE units have agreed to vote in favor of the deal.
Completion of the transaction is subject to the approval of QR Energy unitholders, certain regulatory approvals, and customary closing conditions. The transaction is expected to close in late 2014 or early 2015.
Following the merger, Breitburn will become the largest, oil-weighted upstream oil and gas master limited partnership with a pro forma enterprise value of approximately $7.8 billion.
The transaction is expected to be accretive to distributable cash flow per unit, and upon closing of the transaction, Breitburn has agreed to recommend to its Board a distribution increase to $2.08 per unit on an annualized basis.
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