Kinder Morgan Inc., the biggest U.S. pipeline provider after buying El Paso Corp., won a judge’s approval of a $110 million settlement of investor lawsuits over the 2011 acquisition.
Delaware Chancery Court Judge Leo Strine said today in court that the accord provided a “very large monetary settlement” of El Paso shareholders’ claims they were shortchanged in the $21.1 billion buyout by Kinder Morgan and that El Paso financial adviser Goldman Sachs Group Inc. had conflicting interests in the deal.
The settlement comes after Kinder Morgan officials said in October that third-quarter profit rose on increased natural gas transportation charges from utilities burning more of the fuel in power plants. Net income jumped 76 percent to $379 million from $215 million a year ago, officials said Oct. 17.
Under the terms of the settlement, Houston-based Kinder Morgan is paying the $110 million to El Paso shareholders while Goldman Sachs agreed to forgo its $20 million fee in the El Paso deal to help fund the accord, according to court filings. At today’s hearing in Wilmington, Strine also approved $26 million in legal fees and expenses for investors’ lawyers.
“We are pleased to have the matter resolved,” Larry Pierce, a Kinder Morgan spokesman, said in an e-mail.
David Wells, a spokesman for New York-based Goldman Sachs, didn’t immediately return a call seeking comment on approval of the settlement.
Kinder Morgan closed its acquisition of Houston-based El Paso in May, two months after a judge refused to block a shareholder vote on the takeover. Pierce noted earlier this year that 95 percent of El Paso’s shareholders voted to accept Kinder’s offer, which provided a 47 percent premium.
Strine concluded in March that investors shouldn’t be denied the right to decide whether to accept the offer “despite the disturbing nature of some of the behavior leading to its terms.” Strine allowed investors to proceed with damage claims against Goldman Sachs officials and former El Paso managers over their handling of the deal.
Goldman Sachs’s role in Kinder Morgan’s buyout of El Paso drew investors’ and the judge’s ire because of the bank’s ties to both companies.
The case is In re El Paso Corp. Shareholder Litigation, Consolidated 6949-CS, Delaware Chancery Court (Wilmington).