Magellan Board Unanimously Recommends
Unitholders Vote "FOR" the Pending Merger
TULSA,
Okla., July 11, 2023 /PRNewswire/ -- Magellan
Midstream Partners, L.P. (NYSE: MMP) ("Magellan") announced today
that we have scheduled a virtual special meeting of unitholders for
Sept. 21, 2023 at 10:00 a.m. Central in connection with our pending
merger with ONEOK, Inc. (NYSE: OKE) ("ONEOK"). Magellan unitholders
of record at the close of business on July
24, 2023 will be entitled to vote at the special meeting.
The Magellan board of directors unanimously recommends that
Magellan unitholders vote "FOR" the merger proposal.
"Magellan's board is unanimous in its belief that the pending
transaction maximizes value for Magellan unitholders," said
Aaron Milford, Magellan's president
and chief executive officer. "Our number one job is maximizing
value for our investors – and we believe this transaction does just
that. Magellan's board and management team are confident the
combined company will be stronger and more diversified, and the
value created by this transaction for MMP unitholders is
superior to the value of our standalone alternative, including on
an after-tax basis."
Milford continued, "We couldn't be more proud of Magellan's
success delivering industry leading returns for investors,
exceptional services for customers and rewarding careers for
employees and believe this transaction further builds on our
accomplishments. We urge all unitholders to vote 'FOR' the ONEOK
merger in advance of the upcoming special meeting."
Magellan believes the transaction provides the following
benefits:
- Full value for unitholders that is significantly greater
than Magellan would expect to achieve on a standalone
basis: The transaction delivers a very attractive
and full value to Magellan unitholders with a 22% premium, based on
May 12, 2023 closing prices of
Magellan units and ONEOK common stock. The implied Enterprise Value
/ 2023E Street Consensus EBITDA multiple at the announced
transaction value represents 12.3x, which exceeds the trading
multiples of all of MMP's midstream peers and the average midstream
energy trading multiple of approximately 10x.
- The opportunity for Magellan unitholders to participate in
the upside of a more resilient energy infrastructure company with
greater scale and a compelling dividend through approximately 23%
ownership of the combined company: The combined
company will benefit from a more diverse portfolio with assets
across the NGL, natural gas, refined products and crude oil
segments. Its greater scale and earnings diversity position it for
greater growth and value creation across industry cycles as the
energy transition and broader economy continue to evolve. The
combined company will be more resilient and is expected to produce
stable cash flows through diverse commodity cycles. In addition,
ONEOK pays an attractive dividend. The transaction is also expected
to be earnings per share ("EPS") accretive to OKE beginning in
2024, with EPS accretion of approximately 3% to 7% per year from
2025 through 2027 and free cash flow per share accretion averaging
more than 20% from 2024 through 2027.
- Attractive timing from a tax perspective as long-tenured
unitholders are approaching a sharp increase in taxes
owed: The transaction does not create new taxes
except those resulting from the premium value received and, other
than timing, does not alter unitholders' existing tax liability.
Magellan forecasts a more limited capital investment environment
for our business going forward, which together with the underlying
mechanics of income allocation, means unitholders can expect
Magellan to generate more taxable income and less depreciation to
allocate to limited partners, resulting in higher annual taxes owed
by unitholders. Magellan estimates that long-tenured unitholders
will soon owe taxes each year that amount to approximately 60% of
the distributions they receive. Magellan believes the value created
for MMP unitholders by ownership in the combined entity, together
with the cash consideration, exceeds the expected value the MMP
unitholders could likely capture through continued ownership of MMP
standalone, including after taking taxes into consideration. For
the vast majority of unitholders, Magellan expects the cash portion
of the consideration to more than cover the federal tax owed
following the close of the ONEOK transaction.
Magellan unitholders who need assistance in completing the proxy
card, need additional copies of the proxy materials or have
questions regarding the upcoming special meeting may contact
Magellan's proxy solicitor, Morrow Sodali, LLC, by phone at (800)
662-5200 or (203) 658-9400 or by email at
MMP@info.morrowsodali.com.
As previously announced on May 14,
under the terms of the merger agreement, ONEOK will acquire all
outstanding units of Magellan in a cash-and-stock transaction to
create a combined company with a total enterprise value of
approximately $60 billion. Each
Magellan unitholder will receive $25.00 in cash and 0.667 shares of ONEOK stock
per unit upon completion of the pending merger.
Magellan continues to expect the transaction to close in the
third quarter of 2023 subject to customary closing conditions,
including the approvals of both ONEOK shareholders and Magellan
unitholders. As a result of the expiration of the waiting period
under Hart-Scott Rodino ("HSR") on June 26,
2023, the antitrust regulatory conditions to complete the
transaction have been met.
Advisors:
Morgan Stanley & Co. LLC is serving as financial advisor to
Magellan. Latham & Watkins LLP and Richards, Layton &
Finger, P.A. are acting as Magellan's legal advisors.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly
traded partnership that primarily transports, stores and
distributes refined petroleum products and crude oil. Magellan owns
the longest refined petroleum products pipeline system in the
country, with access to nearly 50% of the nation's refining
capacity, and can store more than 100 million barrels of petroleum
products such as gasoline, diesel fuel and crude oil. More
information is available at www.magellanlp.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This communication contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical fact,
included in this communication that address activities, events or
developments that ONEOK or Magellan expects, believes or
anticipates will or may occur in the future are forward-looking
statements. Words such as "estimate," "project," "predict,"
"believe," "expect," "anticipate," "potential," "create," "intend,"
"could," "would," "may," "plan," "will," "guidance," "look,"
"goal," "future," "build," "focus," "continue," "strive," "allow"
or the negative of such terms or other variations thereof and words
and terms of similar substance used in connection with any
discussion of future plans, actions, or events identify
forward-looking statements. However, the absence of these words
does not mean that the statements are not forward-looking. These
forward-looking statements include, but are not limited to,
statements regarding the proposed transaction between ONEOK and
Magellan (the "Proposed Transaction"), the expected closing of the
Proposed Transaction and the timing thereof and as adjusted
descriptions of the post-transaction company and its operations,
strategies and plans, integration, debt levels and leverage ratio,
capital expenditures, cash flows and anticipated uses thereof,
synergies, opportunities and anticipated future performance,
including maintaining current ONEOK management, enhancements to
investment-grade credit profile, an expected accretion to earnings
and free cash flow, dividend payments and potential share
repurchases, increase in value of tax attributes and expected
impact on EBITDA. Information adjusted for the Proposed Transaction
should not be considered a forecast of future results. There are a
number of risks and uncertainties that could cause actual results
to differ materially from the forward-looking statements included
in this communication. These include the risk that ONEOK's and
Magellan's businesses will not be integrated successfully; the risk
that cost savings, synergies and growth from the Proposed
Transaction may not be fully realized or may take longer to realize
than expected; the risk that the credit ratings of the combined
company or its subsidiaries may be different from what the
companies expect; the possibility that shareholders of ONEOK may
not approve the issuance of new shares of ONEOK common stock in the
Proposed Transaction or that unitholders of Magellan may not
approve the Proposed Transaction; the risk that a condition to
closing of the Proposed Transaction may not be satisfied, that
either party may terminate the merger agreement or that the closing
of the Proposed Transaction might be delayed or not occur at all;
potential adverse reactions or changes to business or employee
relationships, including those resulting from the announcement or
completion of the Proposed Transaction; the occurrence of any other
event, change or other circumstances that could give rise to the
termination of the merger agreement relating to the Proposed
Transaction; the risk that ONEOK may not be able to secure the debt
financing necessary to fund the cash consideration required for the
Proposed Transaction; the risk that changes in ONEOK's capital
structure and governance could have adverse effects on the market
value of its securities; the ability of ONEOK and Magellan to
retain customers and retain and hire key personnel and maintain
relationships with their suppliers and customers and on ONEOK's and
Magellan's operating results and business generally; the risk the
Proposed Transaction could distract management from ongoing
business operations or cause ONEOK and/or Magellan to incur
substantial costs; the risk of any litigation relating to the
Proposed Transaction; the risk that ONEOK may be unable to reduce
expenses or access financing or liquidity; the impact of the
COVID-19 pandemic, any related economic downturn and any related
substantial decline in commodity prices; the risk of changes in
governmental regulations or enforcement practices, especially with
respect to environmental, health and safety matters; and other
important factors that could cause actual results to differ
materially from those projected. All such factors are difficult to
predict and are beyond ONEOK's or Magellan's control, including
those detailed in ONEOK's Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K that are
available on ONEOK's website at www.oneok.com and on the website of
the Securities and Exchange Commission (the "SEC") at www.sec.gov,
and those detailed in Magellan's Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that
are available on Magellan's website at www.magellanlp.com and on
the website of the SEC. All forward-looking statements are based on
assumptions that ONEOK and Magellan believe to be reasonable but
that may not prove to be accurate. Any forward-looking statement
speaks only as of the date on which such statement is made, and
neither ONEOK nor Magellan undertakes any obligation to correct or
update any forward-looking statement, whether as a result of new
information, future events or otherwise, except as required by
applicable law. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the
date hereof.
NO OFFER OR SOLICITATION
This communication is not intended to and shall not
constitute an offer to sell or the solicitation of an offer to sell
or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval, nor shall there be any sale
of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
NON-GAAP FINANCIAL MEASURES
This communication contains references to certain non-GAAP
financial measures. The non-GAAP financial measures presented may
not provide information that is directly comparable to that
provided by other companies, as other companies may calculate such
financial results differently. ONEOK's or Magellan's non-GAAP
financial measures are not measurements of financial performance
under GAAP and should not be considered as alternatives to amounts
presented in accordance with GAAP. ONEOK and Magellan view these
non-GAAP financial measures as supplemental and they are not
intended to be a substitute for, or superior to, the information
provided by GAAP financial results.
IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the Proposed Transaction, on June 20, 2023, ONEOK filed with the SEC a
registration statement on Form S-4, which was amended by Amendment
No. 1 to Form S-4 filed with the SEC on July
11, 2023 (the "Registration Statement"), containing a
prospectus of ONEOK and joint proxy statement of ONEOK and Magellan
(the "joint proxy statement/prospectus"), and each party will file
other documents regarding the Proposed Transaction with the SEC.
This communication is not a substitute for the joint proxy
statementprospectus or Registration Statement or for any other
document that ONEOK or Magellan has filed or may file in the future
with the SEC in connection with the Proposed Transaction. INVESTORS
AND SECURITY HOLDERS OF ONEOK AND MAGELLAN ARE URGED TO CAREFULLY
AND THOROUGHLY READ THE REGISTRATION STATEMENT, THE JOINT PROXY
STATEMENT/PROSPECTUS, INCLUDING ALL AMENDMENTS AND SUPPLEMENTS
THERETO, AND OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED
BY ONEOK AND MAGELLAN WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT ONEOK AND MAGELLAN, THE PROPOSED
TRANSACTION, THE RISKS RELATED THERETO AND RELATED MATTERS.
After the Registration Statement has been declared effective,
a definitive joint proxy statement/prospectus will be mailed to
shareholders of ONEOK and unitholders of Magellan, respectively.
Investors will be able to obtain free copies of the Registration
Statement and the joint proxy statementprospectus and other
relevant documents filed by ONEOK and Magellan with the SEC through
the website maintained by the SEC at www.sec.gov. Copies of
documents filed with the SEC by ONEOK, including the joint proxy
statementprospectus, will be available free of charge from ONEOK's
website at www.oneok.com under the "Investors" tab. Copies of
documents filed with the SEC by Magellan, including the joint proxy
statementprospectus, will be available free of charge from
Magellan's website at www.magellanlp.com under the "Investors"
tab.
PARTICIPANTS IN THE SOLICITATION
ONEOK and certain of its directors, executive officers and
other members of management and employees, Magellan, and certain of
the directors, executive officers and other members of management
and employees of Magellan GP, LLC, which manages the business and
affairs of Magellan, may be deemed to be participants in the
solicitation of proxies from ONEOK's shareholders and the
solicitation of proxies from Magellan's unitholders, in each case
with respect to the Proposed Transaction. Information about ONEOK's
directors and executive officers is available in ONEOK's Annual
Report on Form 10-K for the 2022 fiscal year filed with the SEC on
February 28, 2023, and its definitive
proxy statement for the 2023 annual meeting of shareholders filed
with the SEC on April 5, 2023, and in
the joint proxy statement/prospectus. Information about Magellan's
directors and executive officers is available in its Annual Report
on Form 10-K for the 2022 fiscal year and its definitive proxy
statement for the 2023 annual meeting of unitholders, each filed
with the SEC on February 21, 2023,
and the joint proxy statement/prospectus. Other information
regarding the participants in the solicitations and a description
of their direct and indirect interests, by security holdings or
otherwise, are included in the Registration Statement, the joint
proxy statement/prospectus and other relevant materials filed or
that may in the future be filed with the SEC regarding the Proposed
Transaction when they become available. Shareholders of ONEOK,
unitholders of Magellan, potential investors and other readers
should read the joint proxy statement/prospectus before making any
voting or investment decisions.
Contact:
|
Investors:
|
Media:
|
|
Paula Farrell
|
Bruce Heine
|
|
(918) 574-7650
|
(918)
574-7010
|
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paula.farrell@magellanlp.com
|
bruce.heine@magellanlp.com
|
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SOURCE Magellan Midstream Partners, L.P.