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Breakingviews: Kinder Morgan's M&A pipeline

Monday, August 11, 2014 - 02:36

Jeffrey Goldfarb and Christopher Swann discuss how $71 bln of deals should help the U.S. energy titan jumpstart growth again.

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Richard curator who is the master of both pipelines in the United States and financial engineering. Has put them altogether for an amazing 71 billion dollars worth of multiple deals today. Chris is a lot to cover but what's what's if we can figure out exactly what's going on -- so he's to have the sprawling empire various partnerships. On the operate to from pipelines is now pulling it all under one yet their full companies have won that one sequel to. -- Austin limited partners partnerships one general partnership. When you combine them altogether this is going to be hundred billion dollar market cap companies have -- largest. At and -- Time -- he's sort of pioneered this idea of using master limited partnerships for tax efficient why is -- now sort of like reversing years and it is it is all timing because everyone else of course is rushing in and the advantage of mines limited partnerships as you say if they don't pay corporate income tax. The traffic is when they reach a certain age or size tight cat did this structure can outlived its usefulness and he's going to be that fast hasn't it. To to flip back content being sent to seek. The main reason is that as the ad partnership pages more of the money flows up into the traditional -- -- -- stopped being. Tax advantaged right. And these -- obviously cost of capital looks -- he wants to use this new. Unified structure to -- and probably would buy more pipeline across the country yeah fires back at work better -- -- -- -- the -- disadvantage of them off the limited partnerships. Which is -- not correct -- not a great acquisition parents currency partly because that many institutions simply can't hold them. Think he should be able to -- much faster on the this new arrangement everyone seems like there's recommend these units of the stock of the verve partners as Europe are up. They'll be getting paid a premium but it's around Kinder Morgan the parent company they're they're the stock is up something like 20% of -- -- one. So excitement this is a clever and rub -- -- expected me. But he should should advantage I think every one with the possible exception of Uncle Sam because. And that the fact that they can be buying all of these assets means they get a lot of depreciation. That's gonna cut that tax bill by about twenty billion dollars over the next fourteen years. But everyone else's. But -- -- because it. What we look forward to seeing your piece. We'll be back with more Britain is tomorrow.

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Breakingviews: Kinder Morgan's M&A pipeline

Monday, August 11, 2014 - 02:36