BP Completes $723 Million Acquisition of US Pipelines Partnership BP Midstream Partners

By Mary Holcomb, Digital Editor

(P&GJ) — British oil major BP, its affiliates, and BP Midstream Partners (BPMP) announced Tuesday that a BP U.S. affiliate has completed the previously announced acquisition of all outstanding common units of BPMP.

The acquisition includes outstanding common units not already owned directly or indirectly by BP or its affiliates, which results in BPMP becoming a wholly owned subsidiary of BP.

In December 2021, the company entered into a definitive agreement with the U.S. affiliate to acquire all outstanding common units of BPMP, representing 47.8 million common units. As part of the all-stock deal, the company has offered each unitholder 0.575 of an American depositary share of BP in exchange for each public common unit owned.

According to Reuters, the deal is estimated to have total price of about $723 million. BP already owns roughly 54% of the partnership, Refinitiv data shows.

BP made the offer in August 2021 to acquire the publicly traded units of BPMP, which was created by BP Pipelines to own, operate, develop and acquire pipelines and other midstream assets. BP Pipelines is an indirect wholly owned subsidiary of BP.

Following its announcement to become an integrated energy company last year, BP said this deal deepens its interests in, and simplifies the ownership and governance structure of, midstream assets that support integration and optimization of its fuels value chain in the U.S.

Reuters found that the oil and gas industry has financed billions in pipeline and storage products under tax-advantaged MLPs since the 1980s, but several pipeline companies have restructured in recent years after U.S. regulators said they will no longer be allowed to recover an income tax allowance.

U.S. refiner Phillips 66 unveiled a similar deal in October when it said it would buy the remaining units of Phillips 66 Partners for $3.4 billion.

The all-stock deal has been approved by the Phillips 66 subsidiary that holds a majority of the outstanding common units of the master limited partnership and is expected to close in the first quarter of 2022.

"We believe this acquisition will allow both PSX [Phillips 66] shareholders and PSXP unitholders to participate in the value creation of the combined entities, supported by the strong financial position of Phillips 66," CEO Greg Garland said.

Effective with the opening of markets today, BPMP’s common units will no longer be listed on the New York Stock Exchange (NYSE), and it will cease to be a publicly traded company.

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