ONEOK to expand energy dominance with $4.3bn acquisition of EnLink Midstream units

ONEOK, Inc. (NYSE: OKE) has announced a definitive merger agreement to acquire all outstanding publicly held common units of EnLink Midstream, LLC (NYSE: ENLC) in a $4.3 billion tax-free, all-stock transaction. This move positions ONEOK as a more dominant player in the midstream energy sector while promising greater shareholder returns and liquidity for EnLink unitholders.

Under the agreement, EnLink unitholders will receive 0.1412 shares of ONEOK common stock for every EnLink unit they hold. The valuation, based on EnLink’s closing price of $15.75 on November 22, 2024, equates to approximately 37 million new ONEOK shares, representing 6% of ONEOK’s outstanding shares post-transaction.

ONEOK president and CEO, Pierce H. Norton II, indicated that the deal is strategically aligned with ONEOK’s mission of building a premier energy infrastructure company. He highlighted the transaction’s accretive benefits for ONEOK shareholders and added liquidity for EnLink unitholders, alongside an attractive dividend yield.

Seamless integration with regulatory clearance

The acquisition is set to close in the first quarter of 2025, pending customary conditions and majority approval from EnLink unitholders. As ONEOK already owns 44% of EnLink’s outstanding common units, its commitment to vote in favour of the deal effectively guarantees majority support. Importantly, no additional regulatory hurdles remain, as antitrust clearance under the Hart-Scott-Rodino Act was secured during ONEOK’s earlier acquisition of Global Infrastructure Partners‘ stake in EnLink.

This transaction follows ONEOK’s October 2024 purchase of Global Infrastructure Partners’ 100% interest in EnLink for $3.3 billion in cash, further consolidating its control over the midstream energy company.

Board approval signals confidence

The deal has earned unanimous approval from EnLink’s Conflicts Committee, an independent body responsible for evaluating the merger. After consulting with financial and legal advisors, the committee deemed the terms to be in the best interests of EnLink’s public unitholders. This recommendation was subsequently approved by the EnLink Board of Directors.

Analysts suggest the acquisition positions ONEOK for significant operational synergies, enhancing its ability to deliver value to stakeholders and solidifying its competitive standing within the energy infrastructure sector.

Financial and strategic advisors

Goldman Sachs & Co. LLC served as ONEOK’s lead financial advisor, with additional support from Barclays and Citi. Legal counsel was provided by Kirkland & Ellis LLP. EnLink’s Conflicts Committee received advisory support from Evercore and legal guidance from Richards, Layton & Finger, P.A., while Baker Botts L.L.P. represented EnLink.

This merger underscores ONEOK’s strategy of leveraging consolidation to strengthen its infrastructure and create sustainable growth. By fully integrating EnLink’s operations, ONEOK aims to unlock enhanced efficiencies and expand its value chain, delivering measurable benefits to both companies’ stakeholders.