Phillips 66 has agreed to acquire all of the publicly held common units representing limited partner interests in pipeline operator DCP Midstream LP, in an all-cash deal worth $3.8bn.

The deal, which values the pipeline operator at approximately $8.7bn, will double Phillips 66’s stake in DCP Midstream to 86.8%, reported Reuters.

Phillips 66 will acquire DCP Midstream’s publicly held common units for a cash consideration of $41.75 per common unit.

The acquisition forms part of Phillips 66’s commitment to expanding its natural gas liquids (NGL) business.

Phillips 66 president and CEO Mark Lashier said: “Our wellhead-to-market platform captures the full NGL value chain. As we continue integrating DCP Midstream, we are unlocking significant synergies and growth opportunities.”

In combination with the previously announced realignment of Phillips 66’s economic and governance interests in DCP Midstream, the transaction is expected to generate an incremental $1bn of adjusted EBITDA for Phillips 66.

By integrating DCP Midstream into the existing midstream business, Phillips 66 expects to generate commercial and operational synergies of at least $300m.

Subject to customary closing conditions, the transaction is planned to be closed in the second quarter of 2023.

The remaining 13.2% stake in DCP’s general partner is owned by Canadian pipeline operator Enbridge.