Australian investment management firm IFM Investors has signed a definitive agreement to acquire US-headquartered pipeline operator Buckeye Partners in an all-cash deal.
According to the agreement, the IFM Global Infrastructure Fund will purchase all of the outstanding public common units of Buckeye for $41.50 per common unit.
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The transaction represents an enterprise value of $10.3bn and an equity value of $6.5bn.
It is expected to expand IFM’s midstream energy infrastructure portfolio and will complement the company’s investments in energy infrastructure across North America and globally.
Buckeye provides a range of midstream logistics solutions, including transportation, storage, processing and marketing of liquid petroleum products.
The company’s portfolio of midstream assets comprises 6,000 miles of pipeline and 115 liquid petroleum products terminals located primarily in the East Coast and Gulf Coast regions, as well as in the Caribbean.
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By GlobalDataIFM Investors North America Infrastructure head Julio Garcia said: “This acquisition is aligned with IFM’s focus on investing in high-quality, essential infrastructure assets that underpin the economies in which they operate.”
With $90bn of assets under management, IFM is focused on investing in core infrastructure in developed markets. The company currently has interests in 32 investments, including several midstream assets.
Buckeye Partners chairman, president and CEO Clark Smith said: “Buckeye’s board of directors recently reviewed strategic options for the business and determined that IFM’s proposal to acquire Buckeye is in the best interest of Buckeye.
“The proposed transaction will provide immediate and enhanced value for our unitholders with an attractive premium that accelerates long-term returns and represents the underlying value of our business. In addition, the proposed transaction will provide Buckeye with superior access to capital to execute on its long-term business strategy.”
The transaction is expected to be completed in the fourth quarter of this year. It is subject to the approval of a majority of the Buckeye unitholders, and the satisfaction of certain regulatory approvals and other closing conditions.
In January, Buckeye sold its equity interest in energy storage business VTTI to Vitol Investment Partnership II and IFM Investors. The transaction fetched the company around $975m.
Buckeye also sold a package of domestic pipeline and terminal assets to a subsidiary of InstarAGF Asset Management last December.
