By Dave Sebastian
Hess Midstream Partners LP said it would acquire Hess Infrastructure Partners in a move aimed at simplifying its structure.
The deal includes Hess Infrastructure's water-services business, its 80% interest in Hess Midstream's oil and gas midstream assets and outstanding economic partner interest and incentive distribution rights in Hess Midstream. The companies value the cash and stock deal at $6.2 billion.
Hess Infrastructure is a midstream energy joint venture between Hess and the infrastructure private-equity firm Global Infrastructure Partners.
Hess Corp. and Global Infrastructure will each own 47% of the combined midstream company. The companies will also each receive $275 million in cash.
The deal "simplifies the ownership structure of Hess Midstream, provides transparency on the value of Hess' midstream interests, and positions Hess Midstream for sustainable growth and value creation," Hess Corp. Chief Executive John Hess said.
Hess Midstream said it would assume about $1.15 billion of existing Hess Infrastructure debt and would issue about 230 million Hess Midstream units.
The combined entity's organizational structure would be converted into an "Up-C," in which payments in incentive distribution rights to sponsors are eliminated, Hess Midstream said.
Hess Midstream said the transaction would boost distributable cash flow per unit in 2020 by 6% and more than 15% in 2021 and 2022.
Hess Midstream said it expects its 2020 net income to be between $440 million and $480 million, and for adjusted earnings before interest, taxes, depreciation and amortization of $710 million to $750 million.
Hess Midstream said it expects the deal to close in the fourth quarter.
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