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Energy Transfer to acquire Crestwood Equity Partners in $7.1B all-equity deal

Energy Transfer LP is set to acquire Crestwood Equity Partners LP in an all-equity transaction valued at about $7.1 billion.

The transaction includes the assumption of $3.3 billion of debt, Energy Transfer said in an Aug. 16 news release.

Crestwood common unit holders will get 2.07 Energy Transfer common units for every Crestwood common unit, giving them about 6.5% of Energy Transfer's outstanding common units after the transaction closes, Energy Transfer said.

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The deal includes Crestwood's oil and gas gathering and processing assets in the Delaware, Powder River and Williston basins, which provide about 2 Bcf/d of gas gathering capacity, 1.4 Bcf/d of gas processing capacity, and 340,000 barrels per day of crude gathering capacity, according to the release.

Financial analysts appeared to largely view the deal as strategically sensible.

"We have a solid deal for Energy Transfer because the Crestwood assets plug into ET's scale," Gabriel Moreen, an analyst with Mizuho Securities, said in a phone interview. "That, to me, just indicates the imperative of having scale in midstream energy nowadays."

Hinds Howard, an analyst with CBRE Investment Management, agreed that the deal's "strategic rationale makes sense" from Crestwood's perspective.

"The deal continues consolidation across the sector, which is being driven by lower organic growth opportunities combined with better balance sheets and a push to cut costs across the sector," Howard said in an email.

Fitch Ratings said the purchase "represents a positive move strategically," noting that the deal is neutral for Energy Transfer's credit quality.

"[Energy Transfer]'s positive rating outlook reflects trends that have been evident since the end of 2020, mainly pertaining to balanced financial policy, including capital deployment for growth," Fitch Ratings said in an Aug. 16 note.

The acquisition is expected to close in the fourth quarter, subject to approval by Crestwood's unit holders, regulatory approvals and other customary closing conditions.

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