ONEOK Buys Magellan for $18.8 Billion to Add Oil, Refined Products

Oil pipline

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Key Takeaways

  • Natural gas pipeline firm ONEOK bought Magellan Midstream Partners, L.P. for $18.8 billion.
  • The deal values Magellan stock at $67.50, a 21.8% premium over Friday's closing price.
  • ONEOK said the deal will help it expands its reach into oil and refined products.

Natural gas pipeline operator ONEOK (OKE) said it will expand into oil and refined products transportation with the purchase of Magellan Midstream Partners, L.P. (MMP) for $18.8 billion.

ONEOK said that the deal gives Magellan investors $25 and 0.667 shares of ONEOK for every Magellan share owned. That works out to be $67.50 each, 21.8% above Magellan’s closing price Friday.

ONEOK CEO Pierce Norton II said the acquisition will expand the company’s products platform and boost its core businesses, “as well as enhance our ability to participate in the ongoing energy transformation with an increased presence in sustainable fuel and hydrogen corridors.”

In purchasing Magellan, ONEOK will get the longest refined petroleum products pipeline system in the U.S., with access to nearly half of the country’s refining capacity. 

Magellan CEO Aaron Milford added the agreement gives Magellan investors the benefit of an “upfront cash component” along with ONEOK’s dividend. The transaction is expected to close in the third quarter of this year.

The news sent ONEOK shares tumbling 9% on Monday, while shares of Magellan Midstream Partners soared 13%.

ONEOK and Magellan YTD chart


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