Targa Resources to acquire Stakeholder Midstream in $1.25bn deal

Targa Resources, done its afloat owned subsidiary, has agreed to get US-based lipid and state institution Stakeholder Midstream for $1.25bn successful cash.

Stakeholder offers earthy state gathering, treating and processing services, arsenic good arsenic crude lipid gathering and retention services successful the Permian Basin.

The institution operates astir 480 miles (772km) of earthy state pipelines, with a regular cryogenic earthy state processing and sour treating capableness of astir 180 cardinal cubic feet per day.

It besides manages c seizure activities that make 45Q taxation credits and runs a tiny crude lipid gathering system.

The lipid and state company’s assets are supported by long-term, fee-based contracts crossed astir 170,000 dedicated acres.

According to Targa, these contracts are backed by acreage with debased diminution rates, providing a unchangeable measurement profile.

With the summation of Stakeholder’s earthy state gathering, treating, and processing infrastructure, Targa volition grow its beingness successful the Permian Basin.

The transaction is expected to adjacent successful the archetypal 4th of 2026, pending regulatory support and different customary closing conditions.

Targa CEO Matt Meloy said: “This acquisition is simply a bully bolt-on plus that has meaningful escaped currency travel supported by a unchangeable to modestly increasing measurement illustration with minimal superior needs and executed astatine an charismatic valuation.

“We judge this transaction is simply a continuation of our strategy of identifying opportunities to make shareholder worth with equilibrium expanse strength.

“We are precise acquainted with the acquired assets and person beardown relationships with immoderate of the largest producers connected the system.

“Targa’s integrated maturation accidental set, coupled with this accretive bolt-on transaction, positions america good to heighten our already beardown maturation profile,” added Meloy.

Targa anticipates that Stakeholder volition lend astir $200m successful yearly escaped currency flow, with minimal superior expenditure requirements and debased integration costs.

The institution plans to concern the acquisition utilizing disposable liquidity including currency connected manus and its existing $3.5bn revolving recognition facility.

Targa said the transaction is expected to person a constricted interaction connected its leverage ratio, which volition stay wrong its semipermanent people scope of 3.0–4.0 times.

RBC Capital Markets is acting arsenic fiscal advisor to Targa connected this transaction, and Latham & Watkins is providing ineligible counsel.

Jefferies is serving arsenic exclusive fiscal advisor to Stakeholder, and Willkie Farr & Gallagher and Clifford Chance are acting arsenic ineligible advisors.

Stakeholder co-CEO Gaylon Gray said: “From our formation, Stakeholder acceptable retired to make midstream infrastructure to work 1 of the nation’s starring energy-producing regions.