HOUSTON & DENVER – Phillips 66 (NYSE: PSX) has announced a definitive agreement to acquire all publicly held common units of DCP Midstream, LP (NYSE: DCP), solidifying its commitment to the natural gas liquids (NGL) business. This strategic move, revealed on Thursday, January 5, 2023, will see Phillips 66 purchase the remaining common units of Dcp Midstream Partners for $41.75 per unit in cash. Upon completion of the transaction, Phillips 66 will increase its economic ownership in DCP Midstream to a substantial 86.8%.
This acquisition underscores Phillips 66’s strategic focus on expanding its presence across the NGL value chain. Mark Lashier, President and CEO of Phillips 66, stated, “We are delivering on our commitment to grow our NGL business. Our wellhead-to-market platform captures the full NGL value chain. As we continue integrating DCP Midstream Partners, we are unlocking significant synergies and growth opportunities.”
Strategic Benefits of Acquiring DCP Midstream Partners
The acquisition of DCP Midstream Partners is projected to yield substantial financial benefits for Phillips 66. Coupled with the previously announced realignment of economic and governance interests, this transaction is anticipated to generate an incremental $1 billion in adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for Phillips 66. Furthermore, the company expects to realize operational and commercial synergies of at least $300 million through the seamless integration of DCP Midstream Partners into its existing midstream operations.
Phillips 66 intends to finance the approximately $3.8 billion cash consideration through a strategic combination of available cash and debt. The company is committed to maintaining its investment-grade credit ratings throughout this financial maneuver. The acquisition is currently projected to be finalized in the second quarter of 2023, pending customary closing conditions and regulatory approvals.
Transaction Approvals and Advisors
The transaction has received unanimous approval from the board of directors of DCP Midstream GP, LLC, the general partner of DCP Midstream GP, LP, which in turn is the general partner of DCP Midstream Partners. This approval was based on the unanimous recommendation of a special committee comprised entirely of independent directors. The special committee conducted a thorough evaluation of the transaction, consulting with independent financial and legal advisors to ensure fairness and maximize value for unitholders.
Crucially, affiliates of Phillips 66, holding a majority of the outstanding common units of DCP Midstream Partners, have already provided their consent to approve the transaction. As a result, DCP Midstream Partners will not be soliciting further approval from other common unitholders, streamlining the path to closing.
Phillips 66 was advised by Barclays as the exclusive financial advisor and Bracewell LLP as legal counsel. Morris, Nichols, Arsht & Tunnell LLP served as special Delaware counsel. The special committee of DCP Midstream Partners received financial advice from Evercore and legal counsel from Hunton Andrews Kurth LLP and Richards, Layton & Finger, PA.
More detailed information regarding the transaction can be found in the DCP Midstream Transactions Overview, available on the Phillips 66 Investor Relations website.
About DCP Midstream Partners
DCP Midstream, LP (NYSE: DCP) is recognized as a Fortune 500 midstream master limited partnership, with its headquarters based in Denver, Colorado. DCP Midstream Partners boasts a diverse portfolio of assets across gathering, processing, logistics, and marketing within the midstream energy sector. Notably, DCP Midstream Partners is a prominent player in the industry, ranking among the largest natural gas liquids producers and marketers, as well as one of the largest natural gas processors in the United States. The general partner of DCP Midstream is jointly owned by Enbridge and Phillips 66, highlighting the existing strong relationship prior to this acquisition.
About Phillips 66
Phillips 66 (NYSE: PSX) is a diversified energy company committed to providing energy and improving lives across the globe. With a portfolio spanning Midstream, Chemicals, Refining, and Marketing and Specialties businesses, Phillips 66 manufactures, transports, and markets essential products that power the global economy. Headquartered in Houston, Texas, Phillips 66 employs a global workforce dedicated to safe and reliable operations while actively pursuing a lower-carbon future.
This acquisition of DCP Midstream Partners marks a significant step for Phillips 66 in strengthening its midstream business and capitalizing on the growing demand for NGLs. The integration of DCP Midstream Partners is poised to create substantial value and enhance Phillips 66’s position in the energy landscape.
