Kinder Morgan deal involves $8bn in equity

The Goldman-led, $22bn take-private of energy logistics company Kinder Morgan, officially agreed today, involves a roughly $8bn equity cheque from the private equity consortium and management.

Kinder Morgan today announced a definitive agreement to be sold to an investor group and management in a transaction valued at roughly $22 billion (€17.2 billion).

The energy transportation, storage and distribution corporation, based in Houston, will be taken private for $107.50 per share, according to a press release. That price reflects a 27 percent premium over the close of the company’s stock price on May 26, before the proposed deal was announced.

The transaction value includes roughly $7 billion in assumed debt and $7 billion in newly issued debt. The equity sponsors and management will contribute roughly $8 billion in equity to the deal, according to a Kinder Morgan spokesperson.

Private equity firms sponsoring the deal included Goldman Sachs Capital Partners, AIG, The Carlyle Group and Carlyle affiliate Riverstone Holdings. “Certain affiliates” of Goldman Sachs and AIG are part of the equity group, according to the release, including AIG Financial Products and AIG Highstar Capital.

Kinder Morgan has approximately 8,300 employees, who will continue to be part of “incentive programs that enable them to share in the company’s future accomplishments,” said Kinder Morgan chairman and CEO Richard Kinder, in a statement.

Kinder and Kinder Morgan co-founder Bill Morgan are leading the deal.

Debt financing for the deal will be provided by Goldman Sachs Credit Partners, Citigroup Global Market, Deutsche Bank Securities, Wachovia Securities and Merrill Lynch, Pierce, Fenner & Smith.

Goldman Sachs is advising the private equity consortium on the deal, while Morgan Stanley and the advisory arm of The Blackstone Group are advising a special committee of independent Kinder Morgan board members.