Midstreamers Equitrans Midstream (ETRN) and EQM Midstream Partners LP said Thursday they’ve agreed to a share-for-unit merger, in which each outstanding public common unit of EQM would be exchanged for 2.44 shares of ETRN common stock.
The exchange ratio represents a 3% premium based on the volume weighted average price for EQM and ETRN over the 20 days ending Feb. 26, Kallanish Energy reports.
Equitrans Midstream owns a 53.5% limited partner interest in EQM Midstream Partners on an as-converted basis and the entire non-economic general partner interest in EQM. EQM is a limited partnership formed to own, operate, acquire, and develop midstream assets in the Appalachian Basin.
The companies said EQM will become a wholly owned subsidiary of ETRN upon the closing of the merger, and the simplified C-Corp structure is expected to generate a broader investor base, while the increased float is expected to improve trading liquidity.
“We are simplifying our structure to a single C-Corp, as well as acquiring 25.3 million shares of ETRN from EQT. As a single C-Corp entity, Equitrans will have transparent corporate governance, a larger investor base,” said Thomas F. Karam, ETRN chairman and CEO.
After giving effect to the merger and the purchase of 25.3 million ETRN common shares from EQT Corp. (for $52 million in cash, and remaining consideration, which represents $196 million PV10, to be paid through reduced gathering fees in the two years following Mountain Valley Pipeline’s in-service date.
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