Buckeye Partners acquires Buckeye GP Holdings for $1.14 billion

Buckeye Partners (BPL), a distributor of petroleum in the eastern and mid-western parts of the US, announced yesterday that it will buy its partner GP Holdings L.P (BGH) in a $1.14 billion all-stock deal.

Buckeye Partners, based in Breinigsville, Pennsylvania, owns and operates one of the largest independent refined petroleum products pipeline systems in the US with approximately 5,400 miles of pipeline.

It also owns 67 active refined petroleum products terminals, operates and maintains approximately 2,400 miles of pipeline under agreements with major oil and chemical companies and markets refined petroleum products in the areas served by its pipeline and terminal operations.

Buckeye GP Holdings owns and controls the general partner of Buckeye Partners. Its primary cash-generating assets are its partner interests in Buckeye, which consist of the incentive distribution rights in Buckeye Partners.

Under the deal, BGH unitholders would receive 0.705 BPL limited partnership units in exchange for each BGH limited partnership unit owned at Thursday closing, making the transaction worth about $1.14 billion.

BPL said that the merger is expected to provide benefits to the current owners of both BPL and BGH by decreasing BPL's cost of capital, which would improve its competitive position while pursuing growth opportunities and its ability to accelerate growth in distributable cash flow.