EnLink Midstream, LLC (NYSE:ENLC), a Dallas-based natural gas transmission company, reported significant changes in control and leadership on October 15, 2024, following a major transaction with ONEOK , Inc. (NYSE:NYSE:OKE). The deal, valued at approximately $3.285 billion in cash, resulted in ONEOK acquiring roughly 43% of EnLink's common units and the entirety of its management company.
As part of the transaction, ONEOK has assumed operational control over EnLink and its subsidiaries. The purchase was financed through the net proceeds from ONEOK's recent senior notes offering, completed on September 24, 2024.
Concurrent with the closing of the transaction, EnLink's Board of Directors saw the resignation of Benjamin M. Daniel, Matthew C. Harris, and Scott E. Telesz. Pierce H. Norton II, Walter S. Hulse III, and Lyndon C. Taylor were appointed as new directors, with Norton also serving as Chairman. These new directors, who are also officers at ONEOK, will not receive separate compensation for their board roles.
The new directors' biographies include extensive experience in the energy sector. Norton, the President and CEO of ONEOK, has a long history in natural gas, including executive roles at ONEOK and its predecessor companies. Hulse, ONEOK's CFO, brings financial and strategic consulting expertise, while Taylor, ONEOK's Chief Legal Officer, offers nearly four decades of legal experience, primarily in the energy industry.
Additionally, in connection with their appointments, EnLink entered into indemnification agreements with the new directors, ensuring protection against losses and expenses related to their directorial duties, subject to certain conditions.
In other recent news, EnLink Midstream has undergone significant changes following ONEOK's acquisition of Global Infrastructure Partner's 43% equity interest in the company. This has resulted in the appointment of three ONEOK representatives to the EnLink Board, with Pierce H. Norton II assuming the role of Board Chairman. In the financial sphere, EnLink Midstream's Q3 EBITDA is projected to reach $325 million, slightly below the average estimate of $330 million, according to Citi.
The company has also entered into a Credit Agreement Amendment and finalized an agreement for a public offering of $500 million in senior notes. Morgan Stanley and Wells Fargo have both downgraded EnLink Midstream's stock from Overweight to Equalweight, following the announcement of ONEOK's acquisition.
InvestingPro Insights
Following the significant changes in control and leadership at EnLink Midstream, LLC (NYSE:ENLC), it's worth examining some key financial metrics and insights provided by InvestingPro.
EnLink's market capitalization stands at $6.71 billion, reflecting its substantial presence in the natural gas transmission sector. The company's P/E ratio of 45.14 suggests that investors are willing to pay a premium for its earnings, possibly due to growth expectations or the recent ONEOK acquisition.
InvestingPro Tips highlight that EnLink has maintained dividend payments for 11 consecutive years, which may be reassuring for investors concerned about the impact of the recent changes. The company's dividend yield is currently 3.61%, offering a steady income stream. Additionally, EnLink is trading near its 52-week high, with a price that is 98.65% of its 52-week peak, indicating strong market confidence in the company's prospects post-acquisition.
It's noteworthy that EnLink's revenue for the last twelve months as of Q2 2024 was $6.83 billion, with a gross profit margin of 30.08%. These figures provide context to the $3.285 billion transaction with ONEOK and suggest a solid financial foundation for the company moving forward.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights, with 10 more tips available for EnLink Midstream on the platform.
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