NYC-based investment firm Stonepeak Infrastructure Partners is to buy Bermuda-based shipping company Teekay LNG Partners for about $6.2 billion.

Stonepeak will acquire Teekay LNG Partners for $6.2 billion
Illustration only; Courtesy of Teekay

The parties have entered into an agreement and plan of merger, or, so-called the merger agreement. Under this deal, Stonepeak will buy all the issued and outstanding common units representing limited partner units in Teekay LNG.

This includes approximately 36.0 million common units owned by Teekay Corporation, and 100 per cent of Teekay’s ownership in Teekay GP, Teekay LNG’s general partner.

The board of directors of Teekay GP and Teekay approved the transaction. It will close by the end of 2021. 

Stonepeak will pay $17.00 per common unit. This represents an enterprise value of $6.2 billion, including consolidated and proportionate joint venture net debt, and $1.5 billion in common unit equity value.

The acquisition price represents a premium of 8.3 per cent to the closing price of Teekay LNG’s common units on 1 October 2021, and premiums of 12.3 per cent and 17.5 per cent to the volume-weighted average price of Teekay LNG’s common units over the last 60 and 180 days, respectively.

The transaction remains subject to approval by a majority of Teekay LNG’s common unitholders at a special upcoming meeting.

Teekay, which currently owns approximately 41 per cent of Teekay LNG’s outstanding common units, has entered into a voting and support agreement to vote in favor of the merger.

Teekay will also transfer to Teekay LNG the ownership of the management services companies that currently deliver the operations for Teekay LNG and certain of its joint ventures under existing management services contracts.

Mark Kremin, president and CEO of Teekay Gas Group, said: “Under Stonepeak’s ownership, we expect Teekay LNG to have improved access to competitively priced capital for both fleet renewal and potential future growth in the next phase of our development, which has not been available through the public equity capital markets for many years.”

“Stonepeak has long recognized the growing global demand for LNG and importance of natural gas as a bridge fuel, particularly as the world continues to shift toward cleaner sources of energy,” added James Wyper, senior managing director at Stonepeak.

After the completion of the transaction, the common units of Teekay LNG will be delisted from the New York Stock Exchange. The Series A and B preferred units of Teekay LNG are expected to remain outstanding and continue to trade on the New York Stock Exchange following the completion of the Transaction.

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