As pipeline MLPs go, the combined company will remain well in the middle of the pack as far as size goes. The largest MLP is Enterprise Products Partners L.P. (NYSE: EPD), with a market cap of more than $54 billion. Crestwood, before the merger, is one of the smallest MLPs, with a market cap of just $1.22 billion.
Size really matters to a pipeline MLP. The firms need constant growth in order to fund quarterly distributions to unitholders, and mergers are a key method of growth. Building new pipelines can be an arduous undertaking (see, for example, TransCanada Corp. (NYSE: TRP) and the Keystone XL pipeline).
In addition to Enterprise Products at least six other MLPs check in with market caps above $10 billion:
- Kinder Morgan Energy Partners L.P. (NYSE: KMP), $33.26 billion
- Williams Partners L.P. (NYSE: WPZ), $20.41 billion
- Plains All American Pipeline L.P. (NYSE: PAA), $19.31 billion
- Energy Transfer Partners L.P. (NYSE: ETP), $14.31 billion
- Magellan Midstream Partners L.P. (NYSE: MMP), $11.63 billion
- Oneok Partners L.P. (NYSE: OKS), $11.34 billion
The newly merged company will be larger than some established MLPs though:
- Sunoco Logistics Partners L.P. (NYSE: SXL), $6.26 billion
- Targa Resources Partners L.P. (NYSE: NGLS)
- NuStar Energy L.P. (NYSE: NS), $3.84 billion
- Holly Energy Partners L.P. (NYSE: HEP), $2.1 billion
Prior to the announced merger, Crestwood paid a quarterly distribution of $0.51 and Inergy Midstream paid $0.395. Inergy LP paid $0.29 a quarter. The combined company won’t pay the sum of that, but it’s possible that the new company can approach the $0.67 a quarter paid out by Enterprise. Crestwood’s current distribution is already close to Plains’ $0.575.
Shares of Crestwood are up 4.8%, at $25.00 in a 52-week range of $19.90 to $29.12.
Shares of Inergy Midstream are down 4.8%, at $23.00 in a 52-week range of $18.31 to $26.01.
Shares of Inergy are up 8.5% to $23.89, after posting a new 52-week high of $24.64 earlier today. The 52-week low is $16.40.
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