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Oil M&A Continues As IFM Buys Out Buckeye For $10.3B

Buckeye Partners, LP—one of the largest independent liquid petroleum products pipeline operators in the United States—said on Friday that asset manager IFM Global Infrastructure Fund would buy it in an all-cash deal valued at US$10.3 billion enterprise value and US$6.5 billion equity value.

Buckeye Partners—a publicly traded master limited partnership—owns, operates, or has significant interests in approximately 6,000 miles of pipeline in the United States. Buckeye also has more than 100 delivery locations and 115 liquid petroleum products terminals with aggregate tank capacity of over 118 million barrels. Its network of marine terminals is located primarily in the East Coast and Gulf Coast regions of the United States, as well as in the Caribbean.

Under the definitive agreement with IFM Investors, the IFM Global Infrastructure Fund will buy all outstanding units of Buckeye for US$41.50 per common unit.

Master limited partnerships (MLP) are a corporate structure that’s unique to the United States. With it, companies are not paying corporate taxes and are giving most of their profits to investors, the unit holders, much like dividends.

Buckeye’s board of directors has already unanimously approved the proposed acquisition by IFM, while the closing of the deal is subject to approval from a majority of Buckeye’s unit holders, as well as regulatory approvals, and other customary closing conditions. The closing of the transaction is expected to take place in the fourth quarter of this year.

“The proposed acquisition of Buckeye is a complementary addition to IFM’s substantial investments in energy infrastructure across North America and globally. We look forward to supporting the continuing growth of the business,” Jamie Cemm, Executive Director of IFM, said in a joint statement.

“Buckeye’s Board of Directors recently reviewed strategic options for the business and determined that IFM’s proposal to acquire Buckeye is in the best interest of Buckeye,” Buckeye’s chairman, president and CEO, Clark C. Smith, said.

Following the news of the transaction, Buckeye’s units shot up more than 28 percent shortly after the market opened on Friday.

By Tsvetana Paraskova for Oilprice.com

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