Phillips 66 Company (P66 Company) and Phillips 66 Project Development Inc. (P66 PDI) entered into a definitive agreement to acquire remaining 25.65% stake in Phillips 66 Partners LP (NYSE:PSXP) for $2.4 billion on October 26, 2021. As per the terms of the transaction, the transaction shall be paid in an all-stock transaction in which each outstanding PSXP common unitholder would receive $0.50 shares of Phillips 66 common stock for each PSXP common unit. The Partnership's preferred units would be converted into common units at a premium to the original issuance price prior to exchange for Phillips 66 common stock. Merger will be treated as a taxable sale of 99% of the public common units to P66 PDI and 1% of the public common units to P66 Company in exchange for the merger consideration. Upon closing, Phillips 66 Partners LP will be an indirect wholly owned subsidiary of Phillips 66 and will no longer be a publicly traded partnership. Phillips 66 shall a pay a termination fee of $4.5 million to Phillips 66 Partners LP and vice versa.

The transaction is subject to certain customary conditions, including, among others: (i) approval of the Merger Agreement by holders of a majority of the outstanding Partnership Common Units and Series A Preferred Units, voting together as a single class on an as-converted basis, which was received on October 26, 2021 in the Written Consent; (ii) there being no law or injunction prohibiting consummation of the transactions contemplated under the Merger Agreement; (iii) the effectiveness of a registration statement on Form S-4 relating to the shares of Common Stock to be issued as Merger Consideration; (iv) approval for listing on the New York Stock Exchange of the shares of Common Stock to be issued as Merger Consideration; (v) subject to specified materiality standards, the accuracy of certain representations and warranties of each party; and (vi) compliance by each party in all material respects with its covenants. The terms of the transaction were unanimously approved by the Board of Directors of the general partner of Phillips 66 Partners based on the unanimous approval and recommendation of its conflicts committee, comprised entirely of independent directors. Delivery of the Written Consent is sufficient to approve the Merger. The transaction is expected to close in the first quarter of 2022. As of February 18, 2022, the transaction is expected to close in March 2022. Phillips 66 Partners LP engaged Evercore as its financial advisor and fairness opinion provider and Alan J. Bogdanow, Peter C. Marshall,  Jim Meyer, Sarah Mitchell, Damien Lyster, Brandon Tuck, Brian Bloom, Jeremy Marwell, Craig Zieminski and Robert Ritchie  of Vinson & Elkins L.L.P. as its legal advisor. Citigroup Inc. and BofA Securities, Inc. both acted as financial advisors while Thomas G. Brandt and William N. Finnegan of Latham & Watkins LLP acted as legal advisor to Phillips 66. Computershare Trust Company, National Association acted as transfer agent to Phillips 66. PSXP agreed to pay Evercore a fee of $3.0 million payable upon delivery of Evercore's opinion. Evercore also received a fee of $250,000 upon execution of its engagement letter with the Conflicts Committee, which is fully creditable against the fee payable upon delivery of Evercore's opinion. Mark Young of Hunton Andrews Kurth acted as legal advisor to financial advisor in this transaction.