Kinder Morgan Energy selling some assets for $1.8B

Kinder Morgan Energy Partners has agreed to a $1.8 billion sale of several natural gas pipeline, storage and processing businesses in the Rockies and Midwest to Tallgrass Energy Partners, in a bid to meet regulatory requirements for its El Paso Corp. acquisition.

The Houston-based pipeline giant announced Monday that it plans to shed Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Company, Casper and Douglas natural gas processing, West Frenchie Draw treating facilities in Wyoming, and its 50 percent interest in the Rockies Express Pipeline.

The sell off is the latest maneuver associated with Kinder Morgan’s complex $21 billion acquisition of competitor El Paso Corp., which closed in May. The mega-deal turned Kinder Morgan into a natural gas-moving behemoth and led to an agreement with the Federal Trade Commission to shrink its size through a number of divestitures to gain regulatory approval.

“We would prefer to keep all of these assets, but we anticipated divestiture of certain assets in the Rockies would be necessary to obtain FTC approval,” Kinder Morgan Chairman and CEO Richard D. Kinder.

Kinder Morgan has said it expects to complete announcement of the asset sales by September.

Kinder Morgan values the Tallgrass deal, including Rockies Express debt, at $3.3 billion. The deal is expected to close by year’s end, pending regulatory approval.

Tallgrass is owned by private equity firms The Energy & Minerals Group and Kelso & Company and the Tallgrass management team. Tallgrass CEO David Dehaemers is a former Kinder Morgan chief financial officer and executive vice president of corporate development.

The company plans to retain the Kinder Morgan employees associated with the purchased businesses.