NGL to acquire Gavilon for $890m

NGL Energy Partners has signed an agreement to acquire the diversified midstream energy business of Gavilon for $890m.

Expected to close in December 2013, the acquisition is set to be immediately accretive to NGL’s distributable cash flow per unit.

Following the acquisition, NGL will have a portfolio of organic growth opportunities, with approximately $65m of capital expenditures that are associated with the build-out of terminal assets.

The purchase price will be financed with approximately $240m of equity under a private placement of common units, and approximately $650m of borrowings under NGL’s credit facility.

The cash purchase price represents about 7.5 times Gavilon’s 2014 estimated run-rate earnings before interest, taxes, depreciation and amortisation (EBITDA).

Through a network of more than 300 distribution terminals across 39 states, Gavilon, which is owned by funds managed by Ospraie Management, General Atlantic and Soros Fund Management, markets and supplies refined products and natural gas liquids.

Along with a crude oil and refined products supply, marketing and logistics business (SM&L), Gavilon operates integrated crude oil storage, terminal and pipeline assets in Oklahoma, Texas and Louisiana. The company’s crude assets include a 50% interest in the Glass Mountain pipeline and 4.14 million owned and 3.85 million leased barrels of storage in Cushing, Oklahoma. Other assets include a marine terminal and nine truck terminals with more than 22 lease automatic custody transfer units.

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Image: With the acquisition of Gavilon’s energy business, NGL will have a portfolio of organic growth opportunities. Photo: courtesy of kongsky / FreeDigitalPhotos.net.