Energy Transfer LP (NYSE:ET) entered into a definitive agreement to acquire SemGroup Corporation (NYSE:SEMG) for $1.4 billion on September 15, 2019. Under the terms of the transaction, SemGroup's common stockholders will receive $6.8 in cash and 0.7275 of a common unit of Energy Transfer LP in exchange for each share of common stock. Each share of SemGroup series A cumulative perpetual convertible preferred stock, outstanding immediately prior to the effective time will, at the election of the holders of a majority of such shares, either convert into shares immediately prior to the effective time, be exchanged for a “substantially equivalent security” or be redeemed by SemGroup for cash at a price per share equal to 101% of the liquidation preference. Each holder of shares issued upon conversion of shares of preferred stock will receive the merger consideration in exchange for such shares. Each SemGroup restricted share unit award outstanding immediately prior to the effective time, whether vested or unvested, other than those held by non-employee directors of SemGroup, will be assumed by Energy Transfer LP and converted into a restricted share unit award on the same terms and conditions with respect to a number of common units of Energy Transfer LP equal to the product obtained by multiplying the number of shares subject to such restricted share unit award by a ratio equal to the per share cash amount divided by the closing price of one common unit of Energy Transfer LP on the NYSE on the day prior to the merger closing plus the exchange ratio. Each SemGroup restricted share award outstanding immediately prior to the effective time, whether vested or unvested, other than those held by non-employee directors of SemGroup, will be assumed by Energy Transfer LP and converted into a restricted unit award on the same terms and conditions with respect to a certain number of common units of Energy Transfer LP equal to the product obtained by multiplying the number of shares subject to such restricted share award by the exchange ratio. Each award of performance share units (PSU) that corresponds to shares, that is outstanding and vested as of the effective time, will be cancelled in exchange for the payment of the merger consideration with respect to the number of shares equal to the total number of shares with respect to which such SemGroup PSU award has vested prior to the effective time, and each SemGroup PSU award that is outstanding and unvested as of the effective time shall automatically be cancelled without consideration. Each restricted stock and restricted share units that is outstanding immediately prior to the effective time that is held by a non-employee director of SemGroup will become fully vested and will be cancelled in exchange for the payment of the merger consideration. Upon closing, SemGroup's shareholders are expected to own approximately 2.2% of Energy Transfer LP's outstanding common units.

As of the closing date, Energy Transfer LP will have immediately available to it cash, available lines of credit or other sources of immediately available funds sufficient to consummate the merger. Energy Transfer LP has indicated that following the closing the assets of SemGroup Corporation will be contributed to Energy Transfer Operating. The merger agreement provides that, upon termination of the agreement under certain circumstances, SemGroup may be required to pay Energy Transfer LP a termination fee equal to $54.5 million. No changes in staff are expected in the near term. The merger agreement stipulates that Energy Transfer LP will maintain an office in Tulsa for no less than two years. The completion of the transaction is subject to obtaining regulatory approvals, adoption of the merger agreement by holders of a majority of the outstanding common shares and preferred stock of SemGroup, expiration or termination of review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, effectiveness of Energy Transfer LP's registration statement on Form S-4 and the authorization for listing of common units of Energy Transfer LP to be issued in the merger on the NYSE. The Boards of Directors of SemGroup and Energy Transfer LP and the Board of Directors of Energy Transfer LP's general partner unanimously approved the agreement. Contemporaneously with the execution of the merger agreement, a holder of approximately 85.72% of the issued and outstanding shares of preferred stock of SemGroup entered into a support agreement to vote its shares in favour of the transaction. As of October 16, 2019, FTC granted the early termination notice. SemGroup will hold a special meeting of stockholders on December 4, 2019 to approve the transaction. On October 30, 2019, the registration statement on Form S-4 was declared effective by the SEC. As of December 4, 2019, SemGroup shareholders approved the transaction. The transaction is expected to close by late 2019 or early 2020. As per filing on November 7, 2019, the transaction is expected to close in December 2019. As per the announcement made on December 4, 2019, transaction is expected to close on December 5, 2019. The acquisition is expected to be immediately accretive to distributable cash flow for common unit and would increase Energy Transfer's portion of fee-based cash flows from fixed fee contracts.

William N. Finnegan IV, Debbie P. Yee, Tim Fenn, Bryant Lee, Adam Kestenbaum, Michael Egge, Jason Cruise, Peter Todaro, Joel Mack, Pamela Kellet and Bill Finnegan of Latham & Watkins LLP acted as legal advisors for Energy Transfer LP. Sean T. Wheeler, Douglas E. Bacon, Scott Price, Stefanie Gitler, Mary Kogut Brawley, Mark Dundon and Brooksany Barrowes of Kirkland & Ellis LLP acted as legal advisors for SemGroup. Peter Bowden and Brian Connor of Jefferies LLC acted as financial advisor and fairness opinion provider to SemGroup while Bank of America Merrill Lynch acted as financial advisor for Energy Transfer LP. John D. Amorosi and Darren M. Schweiger of Davis Polk & Wardwell LLP acted as legal advisor to Warburg Pincus LLC. D.F. King & Co., Inc. acted as proxy solicitor for SemGroup. SemGroup will pay $3 million as fee to Jefferies for fairness opinion and an advisory fee of $3 million.