Much discussion about change in Kinder's structure, wasn't sure it was actually going to happen but it does with this rather giant deal. Kinder Morgan Partners, Kinder Morgan Management and El Paso Pipeline will now be consolidated under Kinder Morgan. It looks as if EPB and KMP will be cash and stock (KMI) deals, while KMR will be entirely a stock deal. KMI's dividend is raised significantly.
http://www.cnbc.com/id/101906437?trknav=homestack:topnews:4 -- KMP unitholders will receive 2.1931 KMI shares and $10.77 in cash for
each KMP unit. This results in a price of $89.98 per unit, a 12 percent
premium based on the Aug. 8, 2014, closing prices. This is a premium of
11.4 percent based on the July 16 closing price reference date used by
the parties during the negotiation of the transaction.
-- KMR shareholders will receive 2.4849 KMI shares for each share of KMR.
This results in a price of $89.75 per share, a 16.5 percent premium based
on the Aug. 8, 2014, closing prices. This is a premium of 16 percent
based on the July 16 reference date used by the parties in the
negotiation. The parties negotiated consideration for KMR shares equal to
the consideration for KMP units, using the July 16 reference date.
-- EPB unitholders will receive .9451 KMI shares and $4.65 in cash for each
EPB unit. This results in a price of $38.79 per unit, a 15.4 percent
premium based on the Aug. 8, 2014, closing prices. This is a premium of
11.2 percent based on the July 16 reference date used by the parties in
the negotiation.
-- Both KMP and EPB unitholders will be able to elect cash or KMI stock
consideration subject to proration.
http://online.wsj.com/articles/kinder-morgan-to-consolidate-in-70-billion-deal-1407704960 
Comments
What IRA impact does this create? KMR caused no problems.
Regards,
Ted
http://www.forbes.com/sites/lorensteffy/2014/08/10/kinder-morgan-eats-its-own-will-other-mlps-follow-its-lead/print/
http://www.marketwatch.com/investing/stock/kmi
I may buy KMI, but wouldn't be as large a position as KMP was (looking for more diversification going forward) and if they are going to raise the dividend to $2, the yield on current share price given the rise in pre-market is about 4.74% vs 4.76% yield on Friday's close. Either you can sell with the gain today or wait to be paid in shares of KMI, as the KMR deal is all stock. Given that the price of Kinder's purchases of KMP, KMR and EPB are largely dependent on the price of KMI, I sold (nothing against KMI, but who knows what will happen in the market) and will wait for the dust to settle to look at KMI. People have to do what's best for them, but I just didn't like the variable tied to KMI price and took the gains I had and stepped to the Kinder sidelines for now.
Will also look to diversify to some other names, as well.
Lastly, I do like that the main person who called to short Kinder Morgan Partners and seemed to go on a crusade against all things Kinder is trying to come up with excuses this morning on their Twitter page and is getting a few amusing comments in return. Will be interesting to see if Barrons - who tried to promote the short thesis - will say anything.
Edited to add:
P.S. Thought provoking question and one that I don't have the exact answer to: do energy MLP indexes get restructured now that KMP (and KMR) are going to be gone? If so, who benefits?
Edited to add 2:
Other MLPs higher, including Enterprise Product (EPD), Plains All American (PAA), Plains GP (PGAP), Oneok Partners (OKS) and the Energy Transfer Equity (ETE)/Energy Transfer Partners (ETP) combo.
Remember, KMI is structured as a C-corp with, I believe, qualified dividends. It is not an MLP. It issues no k-1 at tax time. It's perfectly acceptable to hold in a Roth or any other brokerage account.
STB65 - today's action in the KM stocks should have no adverse effects in you IRA. If you hold yours in a Roth treat yourself to a nice dinner and a better bottle of wine in celebration. If you hold yours in a traditional IRA, well you may have to pay taxes at withdrawal on the increased value of your account but that's still a good thing. I'd still go wine and dine yourself.
http://www.fool.com/investing/general/2013/08/08/why-some-mlps-eat-their-general-partners.aspx
I'll spend today cursing not buying either, and call the brokerage going forward.
http://www.thestreet.com/story/12840195/1/cramer-kinders-triumph.html
https://www-us.computershare.com/investor/3x/plans/planslist.asp?stype=all
Regards,
Ted
BX: http://www.marketwatch.com/investing/stock/bx
KKR: http://www.marketwatch.com/investing/stock/kkr
Scott, interesting that old Cramer wants to take credit for standing up for Mr. Kinder yet not enough to take a stake. There's conviction for you.