BY Richard Summerfield
EQT Corporation and Equitrans Midstream Corporation have announced a merger agreement which will create a natural gas business with an initial enterprise value over $35bn.
The deal will see leading US natural gas producer EQT acquire its former pipeline unit in an all-stock transaction that values Equitrans at around $14bn including debt.
Under the terms of the deal, each outstanding share of Equitrans common stock will be exchanged for 0.3504 shares of EQT, giving the deal an equity value of about $5.5bn. The deal is expected to close in the Q4 2023. Upon completion, EQT shareholders will own about 74 percent of the combined company and Equitrans shareholders will own the rest.
The transaction will help in facilitating lower-cost production and transportation of natural gas by adding more than 2000 miles of pipeline infrastructure, the companies said on Monday. Equitrans was spun out from EQT in 2018 when the midstream operations were separated from the gas production business.
“Equitrans is the most strategic and transformational transaction EQT has ever pursued, and we see this as a once in a lifetime opportunity to vertically integrate one of the highest quality natural gas resource bases anywhere in the world,” said Toby Z. Rice, president and chief executive of EQT. “As we enter the global era of natural gas, it is imperative for US natural gas companies to evolve their business models to compete on the global stage against vertically integrated rivals.
“We have identified multiple, high confidence near-term synergies, with significant upside from future infrastructure optimization projects that we believe will drive material value creation for shareholders over time,” he continued. “Our modern, data-driven operating model, first-hand knowledge of Equitrans' operations and successful track record integrating $9 billion of acquisitions, all of which included midstream assets, gives me tremendous confidence in EQT's ability to seamlessly combine the two companies and capture synergies.”
“This strategic transaction with EQT is the culmination of an exhaustive process conducted by the ETRN board to determine the best strategic path forward for our shareholders, employees, and stakeholders,” said Thomas F. Karam, executive chairman of Equitrans Midstream. “Combining with EQT creates a premier vertically integrated natural gas business that is a game changer for the natural gas industry and Appalachian Basin. The transaction delivers full and fair value to ETRN shareholders and provides the opportunity to participate in future value growth as EQT executes on its strategy. We are proud of our employees who have worked hard to build one of the leading midstream companies in the Appalachian Basin. And we are excited for the future with EQT.”
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