Investors in Copano Energy may finally get something for which they’ve waited years: a good return. Kinder Morgan said it plans to buy the Houston-based pipeline company for about $4 billion, a 23.5 percent premium to Copano’s closing price Tuesday.
Copano shares jumped $4.96, or almost 15 percent, to $38.09 in late morning.
“The deal makes a lot of sense and will clearly benefit Copano investors, who are getting a price they haven’t seen [the company] trade at since mid-2008,” said Hinds Howard, chief investment officer for Guzman Investment Strategies in Austin, who tracks energy partnerships.
Copano was once among the fastest-growing pipeline partnerships in the U.S., with quarterly distributions rising at an annual rate of about 30 percent. In the past four years, though, that distribution growth slowed to a trickle.
It has been rumored as a takeover candidate since the death of its founder and former chief executive John Eckel in 2009.
Kinder Morgan was often mentioned as a possible suitor because the two companies shared a joint venture that operated a gas gathering system in the Eagle Ford Shale of South Texas.
Copano’s corporate structure also made it more attractive as an acquisition. Although the company functions much like a partnership, it’s a limited liability corporation, which means it doesn’t have a general partner. That makes it easier to acquire than a traditional master limited partnership.
The deal will benefit Kinder Morgan over the long-term as well, Howard said. The move is part of a buying spree for Kinder Morgan that included the $21 billion purchase of El Paso Corp. last year.