BP plc. (BP), its affiliates and BP Midstream Partners LP have reached an agreement to acquire all the outstanding common units of BP Midstream Partners (BPMP) not already owned. Consequently, they will acquire 47,837,828 common units in an all-stock transaction. BP shares fell 2.47% to close at $25.65 on December 20.
BP is an oil and gas company that operates through three segments: Upstream, Downstream, and Rosneft. Its main operations revolve around oil and natural gas exploration, field development, and production. BP’s dividend yield currently stands at 4.81%. The company recently paid a dividend of $0.32 per share.
BPMP Acquisition
Each unitholder of BPMP will receive 0.575 of an American Depository Share of BP in exchange for each Public Common Unit Held. The transaction is expected to close in the first quarter of next year upon customary approvals.
Moreover, a subsidiary of BP and the majority holder of outstanding common units will vote its shares to approve the acquisition. The oil giant has engaged the services of Bank of America as the financial adviser of the deal and Botts L.L.P as the legal advisor.
The agreement builds on an agreement reached by BP in August to acquire all the publicly traded units of BPMP. Additionally, it is part of the oil major’s bid to simplify the ownership and governance of its midstream assets.
Stock Rating
Last week, Jefferies analyst Jason Gammel reiterated a Hold rating on the stock and lowered his price target to $29.70 from $29.80, implying 15.79% upside potential to current levels.
Consensus among analysts is a Moderate Buy based on 3 Buys and 2 Holds. The average BP price target of $32.93 implies 28.38% upside potential to current levels.
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