Crestwood Midstream Partners L.P. agreed to buy control of a fellow gas pipeline operator, Inergy L.P., on Monday to form a company with a combined enterprise value of about $7 billion, as the boom in drilling continues to foster deal-making.
The complicated takeover is built on a series of cash-and-stock transactions, in which Crestwood Midstream and its affiliate, Crestwood Holdings, will take over Inergy and a related master limited partnership, Inergy Midstream L.P.
Together, the combined company will provide pipeline and other services in some of the biggest oil-drilling areas on the continent, including the Marcellus, Bakken and Eagleford shale formations. The merged pipeline operator is expected to generate about $450 million in earnings before interest, taxes, depreciation and amortization this year.
Crestwood’s chairman and chief executive, Robert G. Phillips, will hold those roles at the combined company.
“We view this transaction as a merger of equals through which we are creating a larger, more diversified operating platform that will be highly attractive to investors, customers, creditors and employees,†Mr. Phillips said in a statement.
Crestwood is controlled by the private equity firm First Reserve, which currently owns all of Crestwood Holdings and about 43 percent of Crestwood Midstream’s limited partner units.
Crestwood was advised by Citigroup and the law firms Simpson Thacher & Bartlett and Akin Gump Strauss Hauer & Feld, while Crestwood Midstream’s board was advised by Evercore Partners and the law firm Morris, Nichols, Arsht & Tunnell.
Inergy and Inergy Midstream was advised by Greenhill & Company, the Jefferies Group and Vinson & Elkins. An independent committee of Inergy directors was advised by SunTrust Robinson Humphrey and the law firm Richards, Layton & Finger, while a similar committee on Inergy Midstream’s board was advised by Tudor Pickering Holt and the law firm Potter Anderson & Corroon.
