Magellan Midstream Partners, L.P. announced the filing of a definitive proxy statement with the U.S. Securities and Exchange Commission in connection with our pending merger with ONEOK, Inc. ("ONEOK"). Magellan also launched a website, MaximizingValueforMMPunitholders.com, which reviews the benefits of the merger, outlines certain tax considerations, provides voting instructions for unitholders and shares perspectives on the transaction from third parties.
The special meeting of unitholders will be held virtually on Sept. 21, 2023 at 10:00 a.m. Central. Magellan unitholders of record at the close of business on July 24, 2023 are entitled to vote at or in advance of the special meeting. The Magellan board of directors unanimously recommends that Magellan unitholders vote "FOR" the proposals related to Magellan's merger with ONEOK.
Magellan unitholders are encouraged to vote and submit proxies in advance of the special meeting and will have until 11:59 p.m. Eastern Time on Sept. 20, 2023 to do so. Unitholders will be receiving proxy cards or other instructions regarding how to vote on the transaction during the course of the next few days.
"Magellan Midstream Partners is proud of our long history of delivering industry-leading returns for our investors, exceptional services for our customers and rewarding careers for Magellan employees," said Aaron Milford, Magellan's chief executive officer. "We are confident that the pending merger with ONEOK is the best path forward for Magellan, and that the transaction is in the best interests of all MMP unitholders."
Milford continued, "In order to receive full value for your units through the completion of the pending transaction, we are asking all Magellan unitholders to vote 'FOR' the merger-related proposals by following the instructions on the WHITE proxy card."
Magellan's #1 job is maximizing value for our unitholders. We believe this transaction does that and here's why:
Combination captures full value for MMP units that is significantly greater than Magellan would expect to achieve on a standalone basis
• 0.667 shares of OKE + $25.00 cash per MMP unit, representing $67.50 or a 22% premium1
• Premium reflects robust outlook for Magellan's business not appreciated by the market
• Cash portion of consideration provides immediate proceeds at fixed value (37% of total)1
• Magellan unitholders to own ~23% of a stronger, more resilient combined company
Combined company will have stronger growth prospects, be more resilient and deliver greater value, including after considering taxes
• Creates combined company with greater growth potential, asset diversity and scale, as well as $200-$400+ million of annual synergies expected
• Mitigates risks associated with continuing to execute standalone plan
Attractive timing from a tax perspective as long-tenured unitholders are approaching a sharp increase in annual taxes owed
• Transaction does not create new taxes except those resulting from the premium unitholders are receiving
• Annual taxes owed by investors are estimated to increase by >100% for long-tenured holders to ~60% of distributions within a few years
As part of ONEOK, Magellan's assets will continue to play an essential role in the daily lives of Americans for decades to come.
Competitive advantages of combined company
• Diversified and complementary expertise and assets create greater growth opportunities, combining Magellan's refined products and crude oil businesses with ONEOK's NGL and natural gas focused businesses
• Strong free cash flow and a commitment to capital returns and dividends
• Significant opportunity for operational and commercial synergies
• Platform for greater capital deployment at attractive returns
• Enhanced resilience across industry cycles
• S&P 500 Index inclusion, providing improved shareholder liquidity
• Strong balance sheet and financial flexibility
Risks if Magellan remains a standalone partnership
• Maturity of core refined products business creates challenges to growing significant existing market position
• Risk of energy transition impacting demand more than expected
• Re-contracting / pricing risks around excess crude oil infrastructure capacity
• Increasingly limited organic growth opportunities at acceptable risk adjusted returns
• Challenges with diversifying through acquisitions at reasonable price points
• Sector-leading capital discipline adds value but also lowers unitholder allocable depreciation and therefore increases unitholder taxes
• Equity repurchases increase value per unit but also lead to higher income per unit, and thereby raise unitholder taxes
The Magellan board of directors unanimously recommends that Magellan unitholders vote "FOR" the proposals related to Magellan's merger with ONEOK, using the WHITE proxy card or WHITE voting instruction form.
