Report Underscores Benefits of Tax Structure
and Value Transaction Delivers to Magellan Unitholders
Magellan Urges Unitholders to Vote "FOR" the
Pending Merger
TULSA,
Okla., July 25, 2023 /PRNewswire/
-- Magellan Midstream Partners, L.P. (NYSE: MMP)
("Magellan") today commented on a report regarding Magellan's
pending merger with ONEOK, Inc. (NYSE: OKE) ("ONEOK") written by
Robert Willens, an independent
expert and specialist in interpreting tax and accounting issues and
their effects on corporate capital transactions, mergers &
acquisitions, private investments, real estate and REITs. The
report is available at MaximizingValueforMMPunitholders.com.
"The Willens report validates the unanimous determination of the
Magellan board of directors that – even after taking the impact of
taxes into account – the pending ONEOK transaction maximizes value
and is in the best interest of Magellan and our unitholders," said
Aaron Milford, Magellan's chief
executive officer. "We asked Robert
Willens to prepare this report because he is widely
recognized as a leading expert in assessing the impact of taxes on
M&A transactions. His report supports our view that the
benefits of the pending transaction with ONEOK for Magellan
unitholders far outweigh the tax costs."
Milford added, "The transaction delivers a significant upfront
premium of 22%1 and a sector-leading multiple of 12.3x
EBITDA2, and allows Magellan unitholders to participate
in the future upside of a stronger and more diversified company.
Our board and leadership team are confident this transaction
maximizes value for unitholders and urge all unitholders to vote
'FOR' the transaction in advance of the scheduled special
meeting."
In his July 10, 2023 report,
Robert Willens noted:
- "In the final analysis, this transaction has, when viewed as an
integrated whole, a remarkably favorable tax profile. When a
valid comparison is made of the tax benefits of the transaction to
the relatively modest tax cost the deal engenders, it is
abundantly clear that such benefits greatly outweigh such
costs."
- "… this transaction does not create tax liabilities for
MMP's unitholders. Those liabilities were always present.
Instead, this transaction simply accelerates their payment; and
[ONEOK] has provided the unitholders with the means, through the
Cash Consideration… to meet those obligations."
- "The Cash Consideration manifests an unusual sensitivity and
solicitude, on [ONEOK]'s part, to the tax consequences of the
transaction to [Magellan]'s unit holders by providing them with
the liquidity they will need to defray their tax
liabilities."
- "As is typically the case, acquirers whose acquisitions are
structured to achieve a basis step up, share that largesse with the
owners of the acquired entity in the form of an increased purchase
price for the acquired entity. In fact, here, an unquantifiable,
but undoubtedly substantial, portion of the "premium" [ONEOK] is
offering in the transaction is directly attributable to the tax
savings [ONEOK] will reap from the basis step up…it would become
readily apparent that the benefits of the 'step up'
substantially outweigh the true 'cost' borne by the unit
holders from accelerating a tax liability that would, inevitably,
have to be shouldered."
Mr. Willens' reports are used by hedge fund managers, lawyers,
accountants, arbitrageurs, corporate tax directors, university
professors and others assessing the complex tax impacts of
transactions. The report, which was commissioned by Magellan,
reflects Mr. Willens' personal views and is based solely on
publicly available information.
Magellan's board of directors unanimously recommends that
unitholders vote "FOR" the pending merger. The special meeting
will be held virtually on Sept. 21,
2023 at 10:00 a.m. Central.
Unitholders of record at the close of business on July 24, 2023 will be entitled to vote their
units in advance of the special meeting. Unitholders will be
receiving proxy cards or other instructions regarding how to vote
on the transaction during the course of the next few days.
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:
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Morrow Sodali,
LLC
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MacKenzie Partners,
Inc.
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Phone: (800) 662-5200
or (203) 658-9400
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Phone: (800) 322-2885
or (212) 929-5500
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Email: MMP@info.morrowsodali.com
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Email:
proxy@mackenziepartners.com
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Information about the
special meeting is also available at
MaximizingValueforMMPunitholders.com
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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.
The Registration Statement was declared effective by the SEC on
July 24, 2023. This communication is
not a substitute for the joint proxy statement/prospectus 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.
Each of ONEOK and Magellan will commence mailing copies of
the definitive joint proxy statement/prospectus to shareholders of
ONEOK and unitholders of Magellan, respectively, on or about
July 25, 2023. Investors will be able
to obtain free copies of the Registration Statement and the joint
proxy statement/prospectus 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 statement/prospectus, 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 statement/prospectus, 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.
NO ADVICE
This communication has been prepared for informational
purposes only and is not intended to provide, and should not be
relied on for, tax, legal or accounting advice. Magellan
unitholders should consult their own tax and other advisors before
making any decisions regarding the Proposed Transaction.
Contact:
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Investors:
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Media:
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Paula
Farrell
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Bruce Heine
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(918)
574-7650
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(918)
574-7010
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paula.farrell@magellanlp.com
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bruce.heine@magellanlp.com
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1 Based on
the closing OKE share and MMP unit prices on May 12, 2023, the
final trading day prior to the announcement of the
transaction.
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2 Based on
an implied Enterprise Value at transaction announcement and street
consensus EBITDA, which exceeds the trading multiples of all of
MMP's midstream peers and the average midstream energy trading
multiple of approximately 10x.
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SOURCE Magellan Midstream Partners, L.P.