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Buckeye Partners, L.P. and Buckeye GP Holdings L.P.

Announce Proposed Merger

 

 

Buckeye Partners, L.P. (BPL) and its publicly traded general partner Buckeye GP Holdings L.P. (BGH) announced on June 11, 2010 that they had reached a definitive agreement to merge the two partnerships.  The merger will be completed with 100% equity consideration and will result in BPL owning BGH and the cancellation of BGH's incentive distribution rights.  Under the terms of the merger agreement, BGH unitholders will receive 0.705 BPL unit for each BGH unit owned when the merger closes.  Approximately 20 million additional units will be issued by BPL as a result of the transaction.

 

The partnerships' management expect benefits of the merger will include a decreased cost of capital, enhancing BPL's ability to pursue growth opportunities and accelerate growth in distributable cash flow; a broader investor base attracted to a single, larger entity; and the right of unitholders to elect seven of the nine BPL directors. By completing the merger transaction with 100 percent equity consideration, BPL expects maintain its investment-grade credit metrics and strong liquidity position.  It is expected that BPL unitholders will experience an initial dilution of distributable cash flow of approximately 6-7 percent in 2011, but there will be long-term accretion due to the benefits of the merger.