DT Midstream's $1.2 Billion Pipeline Acquisition
Deal News | Nov 19, 2024 | Globenewswire
DT Midstream, Inc., a natural gas transmission company, has announced the acquisition of three FERC-regulated natural gas pipelines from ONEOK, Inc. for $1.2 billion. These assets include Guardian Pipeline, Midwestern Gas Transmission, and Viking Gas Transmission, totaling approximately 1,300 miles across the Midwest with a capacity of more than 3.7 Bcf/d. The deal aligns with DT Midstream's strategy of enhancing its natural gas pipeline operations and revenue from high-quality, demand-driven customers. The transaction, which is financed through a mix of debt and equity, is expected to increase the company's adjusted EBITDA to 70% in 2025 and expand its scale to capture growing power demand in the region. The acquisition has board approval and is anticipated to close by early 2025, pending regulatory clearances.
Sectors
- Energy
- Infrastructure
Geography
- United States – The pipelines acquired by DT Midstream are located in the Upper Midwest, covering multiple states within the U.S.
- Canada – The Viking Gas Transmission pipeline connects utility customers in the U.S. Midwest to Canadian supply at Emerson, Manitoba.
Industry
- Energy – The acquisition involves natural gas pipelines, a key component of the energy sector, focusing on production, transportation, and distribution.
- Infrastructure – The transaction involves the acquisition of transmission pipelines, which are critical infrastructure assets for natural gas distribution.
Financials
- 1.2 Billion USD – The total cash consideration for the acquisition of the natural gas pipeline assets.
- ~10.5x 2025 Adjusted EBITDA – The transaction multiple for the acquisition, indicating the valuation relative to anticipated earnings.
- 900 Million USD – The portion of the acquisition financed through debt.
- 300 Million USD – The portion of the acquisition financed through common equity.
- 3.7 Bcf/d – The total pipeline capacity of the acquired assets.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| DT Midstream, Inc. | Acquiring Company | Company | DT Midstream is a Detroit-based company operating natural gas pipelines and related infrastructure across the U.S. and Canada. |
| ONEOK, Inc. | Selling Company | Company | ONEOK, Inc. is a diversified energy company involved in the processing and transmission of natural gas and natural gas liquids. |
| Barclays | Financial Advisor | Company | Barclays is serving as the financial advisor and providing committed financing for the acquisition. |
| Weil, Gotshal & Manges LLP | Legal Advisor | Company | A law firm serving as legal counsel to DT Midstream for this transaction. |
| Guardian Pipeline, L.L.C. | Pipeline Asset | Company | One of the pipeline assets involved in the acquisition, interconnected with DT Midstream's existing infrastructure. |
| Midwestern Gas Transmission | Pipeline Asset | Company | A bi-directional interstate pipeline connecting natural gas supply from Appalachia to the Midwest. |
| Viking Gas Transmission | Pipeline Asset | Company | An interstate pipeline linking U.S. Midwest utility customers to Canadian gas supplies. |