(Reuters) - Propane retailer Ferrellgas Partners LP (FGP.N) agreed to buy Bridger Logistics LLC for about $837.5 million to expand its midstream services business, involving the shipping and storage of oil, giving it a new foothold in the crude oil market.
Bridger, which specializes in moving oil from shale patches to refineries, is partially backed by private equity firm Riverstone Holdings LLC. Ferrellgas will pay $562.5 million in cash and issue 11.2 million of its units for Bridger, the company said on Monday.
Ferrellgas said the deal was expected to immediately add to its earnings.
Shares of Ferrellgas were little changed at $24.70 in midday trading on the New York Stock Exchange. The stock has lost more than 10 percent of its value over the past 12 months.
After the close of the transaction, expected by July 1, Bridger will operate as an independent unit of Ferrellgas.
Ferrellgas said it would raise its quarterly distribution to 51.25 cents per unit from 50 cents after the transaction closes.
Bridger has 610 crude-hauling trucks, two pipeline injection stations, close to 1 million barrels of crude storage, two pipelines and additional pipeline capacity and over 1,300 rail cars. Bridger’s operations span 14 states and include all of the major oil production regions and shale basins.
The company agreed a deal last year with Delta Air Lines Inc (DAL.N) to supply one-third of the oil refined daily at the airline’s Monroe Energy Trainer refinery outside Philadelphia.
In 2013, Bridger partnered with private equity heavy hitter Riverstone, which committed $310 million. Riverstone declined to comment on Monday’s announcement.
Ferrellgas set up its midstream business in May last year when it bought privately held Sable Environmental LLC for $124.7 million.
Simmons & Co International was the leading financial adviser to Ferrellgas and Akin Gump Strauss Hauer & Feld LLP was its legal adviser.
Evercore was Bridger’s financial adviser and Latham & Watkins LLP and Vinson & Elkins LLP were its legal advisers.
Reporting by Anannya Pramanick in Bengaluru and Jarrett Renshaw in New York; Editing by Jessica Resnick-Ault and Bernadette Baum