June 11, 2010 / 3:04 PM / 9 years ago

UPDATE 2-Buckeye Partners to buy Buckeye GP Holdings

* To buy Buckeye GP Holdings in all-stock deal

* Buckeye Partners to issue about 20 mln more units

* Buckeye Partners shares fall as much as 7 pct

* Buckeye GP shares up 19 pct, at a year high (Adds conference call details; updates share movements)

BANGALORE, June 11 (Reuters) - Pipeline operator Buckeye Partners L.P. (BPL.N) agreed to buy Buckeye GP Holdings L.P. (BGH.N), the owner of its general partner, for about $1.14 billion in an all-stock deal.

Shares of Buckeye Partners, which had closed at $58.25 Thursday, fell 7 percent to $54.25, before recouping part of the losses to trade at $55.60 Friday noon on the New York Stock Exchange.

Shares of Buckeye GP jumped about 19 percent to touch a year high of $37.01.

Under the deal, for each Buckeye GP unit, holders will get 0.705 Buckeye Partners units. Buckeye GP currently has 27.7 million shares outstanding.

Buckeye Partners, which expects the deal to be closed in the fourth quarter of 2010, said it will issue about 20 million more units as part of the transaction.

“The most important benefit of this merger is significantly enhancing potential accretion to distributable cash flows generated from future capital investments,” a Buckeye Partners executive said on a conference call.

The deal would also result in the cancellation of Buckeye GP’s incentive distribution rights. The rights allow Buckeye GP to get incentive distributions based on the amount of quarterly cash distributions that Buckeye Partners pays to its limited partners. (Reporting by Krishna N. Das and Vinay Sarawagi in Bangalore; Editing by Vyas Mohan)

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