<article><p><i>Adds details of deal.</i></p><p class="lead">The merger between US midstream companies Magellan Midstream and Oneok will proceed after investors today voted in favor of the $18.8bn deal, creating one of the largest oil and gas pipeline companies in North America.</p><p>Unitholders for the two Tulsa-based companies voted separately to approve the merger that will see natural gas liquids (NGL)-focused Oneok acquire crude and refined products-oriented Magellan. Preliminary results show 55pc of Magellan unitholders voted in favor, while 96pc of Oneok shareholders gave the deal a green light.</p><p>Magellan agreed on 14 May to sell the company to Oneok, touting scale, synergies and cost savings to investors. Significant to the deal were tax implications for each company, but that aspect was problematic for at least one Magellan unitholder, <a href="https://direct.argusmedia.com/integration/newsandanalysis/article/2486717">who vocally opposed the transaction</a>, casting doubt on the deal.</p><p>The two companies combined will have a 50,000-mile pipeline network in the central US, with about half of the pipelines focused on liquids. Oneok will receive Magellan's 9,800-mile refined products network with 54 terminals spanning from North Dakota to the US Gulf coast. Magellan's crude business is comprised of 2,200 miles of pipeline, including the fully-owned 275,000 b/d Longhorn pipeline and 30pc stake in the 440,000 b/d BridgeTex pipeline, both connecting Permian producers to markets on the US Gulf coast.</p><p>Magellan also brings a significant crude terminal in Houston, Texas, with access to the water, a condensate splitter and 39mn bls of crude oil storage capacity.</p><p>There is currently little overlap between Oneok and Magellan's physical networks, but NGL and refined products systems could be linked.</p><p>Oneok is well-established in the NGL sector but has not moved into LPG and ethane exports. Magellan's Galena Park products export terminal on the Houston Ship Channel could represent an opportunity for overseas NGL shipments.</p><p>"You can move NGL and refined products pretty easily on the same pipes," said Magellan chief executive Aaron Milford in August, but keeping crude movements segregated is critical for international buyers tapping into the Permian basin.</p><p>The deal is expected to close next week on 25 September, before markets open, making tomorrow the last day Magellan units will be traded.</p><p>The resulting company will have an enterprise value of about $60bn.</p><p>Magellan unitholders will get $25 and 0.667 shares of Oneok in exchange for each unit of Magellan held.</p><p>Magellan unitholders today voted against a proposed "merger-related compensation" package for some executives, but this was non-binding and "such compensation will be payable, regardless of the outcome of this advisory vote if the merger proposal is approved," according to the deal's proxy statement dated 25 July. The proxy statement says Oneok will still take the outcome of the vote under consideration.</p><p>Milford would receive about $28mn in the form of cash and equity for merger-related compensation with three other executives receiving between $8mn-$15mn. Magellan's former chief executive Michael Mears, who retired in 2022, will receive a similar amount of compensation as Milford, matching existing unvested share awards.</p><p class="bylines">By Brett Holmes</p></article>
