Enterprise Products, Oiltanking announce terms of merger agreement

Enterprise Products and Oiltanking Partners announced today that Enterprise and Oiltanking Partners have entered into a merger agreement.

Under the terms of the merger agreement, Oiltanking Partners would merge with a subsidiary of Enterprise in a unit-for-unit exchange.

Unitholders of Oiltanking Partners (other than Enterprise and its subsidiaries) would receive 1.3 Enterprise common units for each Oiltanking Partners common unit. This exchange ratio represents a 5.6% premium to Oiltanking Partners unitholders based on the respective closing prices for Enterprise and Oiltanking Partners common units on September 30, 2014, the day before the merger was originally proposed.

Relative to the respective closing prices for Enterprise and Oiltanking Partners common units on November 10, 2014, the day before the parties entered into the merger agreement, the 1.3 exchange ratio represents a 10.4% premium to Oiltanking Partners unitholders.

Based on the latest cash distribution declared by Enterprise and Oiltanking Partners with respect to the third quarter of 2014, this exchange ratio would result in a 74% increase in cash distributions for Oiltanking Partners unitholders.

Approval and adoption of the merger agreement will be submitted to a vote of the unitholders of Oiltanking Partners.

“We are pleased to announce the execution of this merger agreement that would result in the merger of Oiltanking Partners into Enterprise,” said Michael A. Creel, CEO of the general partner of Enterprise.

“The combination of Enterprise’s system of midstream assets and Oiltanking Partners’ access to waterborne markets and crude oil and petroleum products storage assets would extend and broaden Enterprise’s midstream energy services business," he continued.

"Upon completion of the merger, Oiltanking Partners unitholders would benefit from Enterprise’s scale, diversification and financial flexibility; visibility to growth driven by over $6 billion of capital projects under construction; a significant increase in cash distributions; and more daily liquidity from ownership of Enterprise common units.”

Upon completion of the merger, which is expected to occur in early 2015, the total consideration paid by Enterprise for the Oiltanking Partners general partner and related incentive distribution rights and the limited partner units would be approximately $6.0 billion.

As part of their evaluation process, the Oiltanking Partners conflicts committee retained Jefferies LLC as its financial advisor, Latham & Watkins LLP as its legal advisor and Richards, Layton & Finger, P.A. as its special Delaware legal advisor. Vinson & Elkins L.L.P. also acted as special legal counsel to Oiltanking Partners.

Citi acted as financial advisor and Andrews Kurth LLP and Akin Gump Strauss Hauer & Feld LLP acted as legal counsel to Enterprise.

The closing of the merger is subject to customary closing conditions, including effectiveness of a registration statement related to the issuance of new Enterprise common units to Oiltanking Partners’ unitholders.

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