Phillips 66 Partners Buys 25% Stake in Bakken Pipeline

Phillips 66 Partners (PSXP) said early Friday it reached an agreement with Phillips 66 (PSX) to acquire the latter’s 25% interest in each of Dakota Access and Energy Transfer Crude Oil Co. as well as a 100% interest in Merey Sweeny, the owner of fuel-grade coke processing units at the Phillips 66 Sweeny Refinery in Old Ocean, Texas, for a total $2.4 billion.

Phillips 66 Partners said it expects the acquisition to be immediately accretive to the company and its shareholders, with closing slated for early October.

The deal will be funded through a combination of debt, proceeds from a private placement of equity units, and PSXP units issued to Phillips 66.

The total transaction value includes $625 million in proportional non-consolidated, non-recourse debt from Bakken Pipeline, which refers to Dakota Access and Energy Transfer, and $100 million of Merey Sweeny debt.

Phillips 66 Partners said the deal reflects multiple of about 8.9 times based on the forecasted FY 2018 adjusted EBITDA of about $270 million of acquired assets.

In connection with the Merey Sweeny acquisition, Phillips 66 Partners said it will enter into a new 15-year tolling pact that includes a base throughput fee and minimum volume commitment from Phillips 66.

In a separate statement, Phillips 66 Partners said it is selling $750 million of newly issued series A perpetual convertible preferred units at $54.27 per preferred unit and over 6.3 million common units at $47.59 per common unit in a private placement.

Net proceeds from the offering will be used to fund the proposed acquisitions.

Remaining proceeds will be deployed for general partnership purposes, including funding of future acquisitions and organic projects and repayment of outstanding debt.

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