Tallgrass Energy GP, LP merger with Tallgrass Energy Partners, LP


Barclays acted as advisor to TEGP and Evercore Partners acted as advisor to the TEP Conflicts Committee. Baker Botts L.L.P. served as legal counsel to TEGP and Bracewell LLP served as legal counsel to the TEP Conflicts Committee.

Tallgrass Energy GP, LP (NYSE: TEGP) and Tallgrass Energy Partners, LP (NYSE: TEP) today announced the execution of a definitive agreement pursuant to which TEGP will acquire the approximately 47.6 million TEP common units held by the public in a taxable stock-for-unit merger transaction at a ratio of 2.0 TEGP Class A shares for each outstanding TEP common unit.

The merger agreement has been unanimously approved by the Board of Directors of TEGP’s general partner, the Conflicts Committee of the Board of Directors of TEP’s general partner (the “TEP Conflicts Committee”) and the Board of Directors of TEP’s general partner. Subject to customary approvals and conditions, the merger is expected to close by the end of the second quarter of 2018.

Under the terms of the merger agreement, TEGP will acquire the approximately 47.6 million TEP common units held by the public at a fixed exchange ratio of 2.0 TEGP Class A shares for each outstanding common unit. As a result of the proposed transaction, the TEP incentive distribution rights will be cancelled, the TEP common units will no longer be publicly traded and 100 percent of the equity interests of TEP will be owned by TEGP’s subsidiary, Tallgrass Equity, LLC (“Tallgrass Equity”).

In the proposed transaction, TEGP will issue an aggregate of approximately 95.2 million Class A shares to former TEP common unitholders, representing approximately 62.1 percent of the outstanding Class A shares of TEGP following the transaction. The revolving credit facilities of TEP and Tallgrass Equity, and the senior notes of TEP are expected to remain outstanding following the merger. Assuming the merger closes on or before the record date for the second quarter 2018 dividend, former TEP unitholders holding TEGP Class A shares on the record date would be entitled to receive the second quarter 2018 dividend on the TEGP Class A shares they receive in the merger in accordance with TEGP’s agreement of limited partnership.

Completion of the merger is subject to customary closing conditions, including the approval by holders of a majority of the outstanding TEP common units, including common units owned by Tallgrass Equity, and the expiration or termination of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act. As part of the transaction, TEGP and certain of its subsidiaries entered into a support agreement agreeing to vote their approximately 25.6 million TEP common units (representing approximately 35 percent of the total outstanding TEP common units) in favor of the merger.

Bracewell LLP is serving as counsel to the Conflicts Committee of the Board of Directors of the General Partner of Tallgrass Energy Partners, LP with a team including Troy L. Harder (Picture), Gary W. Orloff, Tony L. Visage, Bruce R. Jocz, Michele J. Alexander, Daniel E. Hemli, Steven J. Lorch, Allison K. Perry Lytch T. Gutmann, Andrew W. Monk, Kathy W. Medford and Ryan Davis.

Baker Botts Represents Tallgrass Energy GP, LP with a team including Mollie Duckworth (Partner, Austin); Joshua Davidson (Partner, Houston); Courtney Fore (Senior Associate, Austin), Rachel Ratcliffe (Associate, Austin); Allison Lancaster (Associate, Austin) and Ty’Meka Reeves-Sobers (Associate, Austin); Michael Bresson (Partner, Houston) and Jon Nelsen (Tax), Daniel Tristan (Partner, Houston); David Nimmons (Finance), Mark Bodron (Partner, Houston) and Stephanie Jeane (Employee Benefits).

Involved fees earner: Troy Harder – Bracewell; Gary Orloff – Bracewell; Lytch Gutmann – Bracewell; Andrew Monk – Bracewell; Kathy Witty Medford – Bracewell; Ryan Davis – Bracewell; Tony Visage – Bracewell; Bruce Jocz – Bracewell; Michele Alexander – Bracewell; Steven Lorch – Bracewell; Allison Perry – Bracewell; Daniel Hemli – Bracewell; Mollie Duckworth – Baker Botts; Joshua Davidson – Baker Botts; Courtney Fore – Baker Botts; Rachel Ratcliffe – Baker Botts; Allison Lancaster – Baker Botts; Ty’Meka Reeves – Baker Botts; Michael Bresson – Baker Botts; Jon Nelsen – Baker Botts; Daniel Tristan – Baker Botts; David Nimmons – Baker Botts; Mark Bodron – Baker Botts; Stephanie Jeane – Baker Botts;

Law Firms: Bracewell; Baker Botts;

Clients: Tallgrass Energy GP, LP; Tallgrass Energy Partners, LP ;

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Author: Ambrogio Visconti