Brookfield Infrastructure Partners L.P. BIP, along with Texas-based energy infrastructure company Kinder Morgan, Inc. KMI, has decided to buy out the 53% ownership interest of Myria Holdings, Inc. in Natural Gas Pipeline Company of America LLC (“NGPL”) for an aggregate value of $242 million.
The deal values NGPL, one of the largest interstate pipeline systems in the U.S. with 200 miles of natural gas pipe and 288 billion cubic feet of working gas storage primarily near Chicago, at $3.4 billion including debt. As part of this agreement, Brookfield Infrastructure will pay $106 million to boost its ownership from 27% to 50% and Kinder Morgan will pay $136 million to raise its stake from 20% to 50% to Myria Holdings.
Kinder Morgan currently runs the day-to-day operations of NGPL and will continue to do so.
This deal giving Brookfield Infrastructure and Kinder Morgan the entire rights to NGPL will boost their ability to provide natural gas transportation and storage services to customers. The transaction is expected to close by this year.
NGPL is connected to the major natural gas resource plays including Utica, Eagle Ford and Marcellus Basin. As a result of the shale boom in the U.S. and the increasing awareness about natural gas as a clean burning energy source, higher production volumes have necessitated pipelines to transport natural gas from these plays to the refineries. By increasing its ownership stake in NGPL, Brookfield Infrastructure has unlocked opportunities for revenue growth.
Recently, an Australian affiliate of Brookfield Infrastructure acquired a 14.9% stake in freight logistics company, Asciano Limited, for $1.2 billion. However, Brookfield Infrastructure’s takeover of Asciano has been stalled for the time being by Australian Competition and Consumer Commission.
Zacks Rank
Brookfield Infrastructure currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks worth considering are Korea Electric Power Corp. KEP and Huaneng Power International, Inc. HNP, both sporting a Zacks Rank #1 (Strong Buy).
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