US-based refining company Phillips 66 (PSX) has agreed to acquire shares it does not already own in Phillips 66 Partners (PSXP) in an all-stock deal worth $3.4bn.

According to the agreement, PSXP shareholders will receive 0.50 shares of PSX common stock for each share held.

Currently owning a 74% limited partner interest in Phillips 66 Partners, Phillips 66 expects the deal to simplify its governance and corporate structure.

Public shareholders hold a 26% limited partner interest and 13.8 million perpetual convertible preferred units in Phillips 66 Partners.

Phillips 66 chairman and CEO Greg Garland said: “We believe this acquisition will allow both PSX shareholders and PSXP unitholders to participate in the value creation of the combined entities, supported by the strong financial position of Phillips 66.”

Upon the completion of the deal, Phillips 66 Partners will become a fully owned subsidiary of Phillips 66. It will also cease to be a publicly traded partnership.

Phillips 66’s fully owned subsidiary Phillips 66 Project Development, which holds a majority of the outstanding common units of the partnership, has voted to approve the deal.

Phillips 66 anticipates the deal to close in the first quarter of 2022.

Phillips 66 Partners is a publicly listed master limited partnership. It was created by Phillips 66 in 2013 to operate in the midstream sector.

It is engaged in operating, developing and acquiring primarily fee-based crude oil, natural gas liquids pipelines, refined petroleum products, and terminals and other midstream assets.

In August 2021, Reuters reported that Phillips 66 was in talks with a potential buyer for its 50-year-old Alliance refinery in the US state of Louisiana.

Located on the Mississippi River in Belle Chasse, the Alliance refinery has a capacity of 255,000bpd. It mainly processes light, low-sulphur crude oil.