ETP to sell propane operations to AmeriGas for $2.9bn

Energy Transfer Partners (ETP) has entered an agreement to sell its propane operations, which include Heritage Operating and Titan Energy, to AmeriGas Partners for $2.9bn.

According to the agreement, ETP will receive $1.5bn in cash and $1.3bn of AmeriGas common units, along with $71m of existing Heritage debt.

With this transaction, ETP will own 34% of AmeriGas’s common units and commit to retaining those units by 2013.

Energy Transfer Partners CFO Martin Salinas said that the contribution of propane operations will provide substantial funds towards reducing the firm’s debt, thereby lowering external capital requirements, including equity issuance.

The transaction will be completed by the end of 2011 or early 2012, and is subject to customary closing conditions including approval under the Hart-Scott-Rodino Act.