M&A: Energy, Resources Deals Heat Up


By Gordon Platt

Pipeline deals, shale-energy plays and natural resources transactions—often involving Asian buyers—provided an energetic start to mergers and acquisitions in 2013.

The overall January deal totals for the Americas and Europe surpassed the levels of January 2012, although M&A transactions in Asia were off slightly from a year earlier, according to Thomson Reuters.

Kinder Morgan Energy Partners, the biggest US pipeline company, agreed to acquire Houston-based Copano Energy in a stock-swap deal valued at $4.7 billion, including debt. The acquisition will give Kinder Morgan natural gas gathering capabilities in numerous shale-energy properties in the US. “We continue to be bullish on the domestic shale plays and believe they will drive substantial future growth,” Richard Kinder, chairman and CEO of Kinder Morgan, said in a statement. “We will be able to pursue incremental development in the Eagle Ford Shale play in south Texas, [and] gain entry into the Barnett Shale Combo in north Texas and the Mississippi Lime and Woodford Shales in Oklahoma.”

Copano Energy owns or operates 6,900 miles of natural gas pipelines in Texas, Oklahoma and Wyoming. Kinder Morgan will gain complete control of the Eagle Ford Gathering that collects, transports and processes natural gas for producers in the Eagle Ford Shale. It agreed to pay a 24% premium for Copano, its partner in the gas-gathering joint venture.

Sinochem, China’s largest supplier of chemicals, agreed in January to buy a 40% interest in oil-shale acreage in the Wolfcamp site in Texas from Pioneer Natural Resources for $500 million. Sinochem also agreed to pay $1.2 billion of Pioneer Natural’s future drilling costs. “This accelerated development will add significant production and reserves for Pioneer while enhancing shareholder value,” Scott Sheffield, chairman and CEO of Pioneer Natural, said in a statement. Meanwhile, China National Offshore Oil Corporation received approval from Canadian authorities for its $15 billion takeover of Nexen, a Canadian energy company. The deal was announced last year.

A consortium led by South Korean steelmaker Posco and Taiwan’s China Steel agreed to acquire a 15% stake in ArcelorMittal Mines Canada for $1.1 billion. Owing to weak steel demand, ArcelorMittal has been selling assets to lower its debt. China Steel has been seeking to increase its self-sufficiency in iron-ore supplies by investing in mines.

In Europe, German utility E.ON and France’s GDF Suez agreed in January to sell their combined 49% holding in Slovak gas group SPP for $3.5 billion to EPH, a Czech investment fund. The Slovak government is also selling its 51% stake in SPP, which operates retail gas-distribution networks in the country and owns a section of a key pipeline that transports Russian gas to Western Europe.

E.ON also agreed in January to sell a 43% stake in E.ON Thüringer Energie, based in Erfurt in central Germany, to a municipal consortium, KEBT. The deal has a rank value of $1.16 billion.

In Asia the largest M&A transaction in January was Hana Financial Group’s agreement to acquire the remaining 40% stake in Korea Exchange Bank in a stock-swap transaction valued at $1.76 billion. The deal completed Hana Financial’s $3.9 billion takeover of KEB from Lone Star Funds and the Export-Import Bank of Korea.

Hana Financial said the acquisition would expand its global reach, enabling it to compete abroad with KB Financial and Woori Finance Holdings. The deal had been pending for more than a year because of legal and regulatory delays.

Elsewhere in Asia, China’s Citic Telecom International Holdings agreed to buy 79% of Macau’s monopoly landline operator for $1.16 billion, boosting its holding to 99%.

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