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Regency Energy Partners To Buy PVR Partners In $5.6 Bln Deal


Natural gas pipeline operator Regency Energy Partners L.P. (RGP) has agreed to acquire rival PVR Partners L.P. (PVR) for a total value of about $5.6 billion, including the assumption of net debt of $1.8 billion, the two companies said Thursday.

The acquisition will give Regency Energy a strategic presence in two prolific producing areas, the Marcellus and Utica shales in the Appalachian Basin as well as the Granite Wash in the Mid-Continent region. Shares of PVR Partners are gaining more than 14 percent in the regular trading session following the announcement.

The two companies noted that the deal will create a leading gas gathering and processing platform with a scaled presence across North America's premier high-growth unconventional oil and gas plays in Appalachia, West Texas, South Texas, the Mid-Continent and North Louisiana.

The boards of directors of both companies have approved the deal that will be a unit-for-unit transaction plus a one-time cash payment to PVR unitholders. The transaction is subject to approval by PVR's unitholders.

Dallas, Texas-based Regency Energy is a master limited partnership engaged in the gathering and processing, contract compression, contract treating and transportation of natural gas as well as the transportation, fractionation and storage of natural gas liquids.

Radnor, Pennsylvania-based PVR Partners is a publicly traded limited partnership that owns and operates a network of natural gas midstream pipelines and processing plants, and also owns and manages coal and natural resource properties.

Under the terms of the deal, PVR unitholders will receive a consideration valued at $28.68 per common unit based on Regency's closing price as of Wednesday, October 9, 2013. This represents a 25.7 percent premium to the closing price of PVR's common units of $22.81 on October 9.

Holders of PVR common units, Class B units and special units will receive 1.020 common units of Regency for each PVR unit held by them. PVR unitholders also will receive a one-time cash payment at closing of the merger that is estimated to be about $40 million.

Following the closing, the combined company will retain the name as Regency, with its headquarters in Dallas. Michael Bradley will continue as president and chief executive officer of the combined company, while Thomas Long will continue as executive vice president and chief financial officer.

Michael Bradley, president and chief executive officer of Regency Energy said, "We expect the increased footprint and scale to create significant synergies and provide substantial organic growth opportunities that will continue to support our goal of increasing distributions and creating unitholder value."

Regency Energy expects the acquisition to be slightly dilutive to 2014 DCF, but does not expect the acquisition to affect anticipated cash distribution growth in 2014. In addition, the company anticipates that the enhanced scale, balance sheet strength and diversification will provide substantial EBITDA and DCF growth over time.

In late February, Regency Energy said it agreed to buy Southern Union Gathering Co. LLC, the owner of Southern Union Gas Services Ltd. or SUGS, from Southern Union Co. for $1.5 billion. At that time, the company noted that the acquisition will significantly expand its presence in the Permian Basin, one of the most productive oil and liquids-rich basins in North America.

In Thursday's regular trading session, RGP is trading at $26.65, down $1.18 or 4.26 percent on a volume of 137,329 shares.

PVR is trading at $26.16, up $3.35 or 14.69 percent on a volume of 378,203 shares.

by RTTNews Staff Writer

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