IFM Investors has agreed to acquire listed US pipeline operator Buckeye Partners for $6.5bn (鈧�5.79bn), giving the Australian-based global infrastructure investor a wider footprint in the US market.
The all-cash transaction, announced Friday, is valued at $10.3bn enterprise value and $6.5bn equity value.
IFM is paying $41.50 per unit for the US company, representing a 27.5% premium on Buckeye鈥檚 closing unit price on 9 May.
Following the acquisition, Buckeye will be privatised.
Buckeye owns and operates one of the largest diversified networks of integrated midstream assets in the US, including 6,000 miles of pipeline servicing more than 100 delivery locations and 115 liquid petroleum products terminals with an aggregate tank capacity of more than 118m barrels.
Its network of marine terminals is located primarily in the East Coast and Gulf Coast regions of the US, as well as the Caribbean.
Julio Garcia, IFM鈥檚 head of infrastructure, North America, said: 鈥淭he acquisition is aligned with IFM鈥檚 focus on investing in high quality, essential infrastructure assets that underpin the economies in which they operate.鈥�
Clark Smith, Buckeye鈥檚 chairman, president and chief executive, told analysts during a call to announce the transaction and the firm鈥檚 first-quarter results that Buckeye had announced a strategic review of its options last year.
There was a trend to more stability and self-funding in the public market, he said, and this had weakened company multiples, resulting in an undervaluation of Blackeye鈥檚 assets.
鈥淥n the other hand, there is strong interest in private and infrastructure funds, resulting in more attractive multiples for Blackeye鈥檚 assets.鈥�
