ONEOK (OKE, Financial), a leading U.S. oil pipeline operator, has announced a definitive merger agreement to acquire all publicly held common stock of EnLink Midstream (ENLC) in a transaction valued at $4.3 billion. Under the agreement, each outstanding common unit of EnLink not already owned by ONEOK will be converted into 0.1412 shares of ONEOK common stock. This exchange ratio is based on dividing $15.75, which is equivalent to EnLink's closing price on November 22, 2024, by ONEOK's 10-day volume-weighted average price (VWAP).
The proposed transaction will result in ONEOK issuing approximately 37 million shares, representing about 6.0% of its total outstanding shares post-completion. This merger is part of a broader trend in the oil industry where private equity firms are selling assets to corporate buyers. The consolidation is driven by fossil fuel companies with substantial cash reserves aiming to scale up and modernize their drilling inventories.
Earlier this year, in August, ONEOK agreed to acquire stakes in competitors in the Permian Basin, with the deals valued at a total of $5.9 billion. These acquisitions included Global Infrastructure Partners' (GIP) entire interest in EnLink Midstream LLC and GIP's stake in Medallion Midstream, one of the largest crude oil gathering systems in the Permian Basin.
