DCP - DCP Midstream shoots higher after Phillips 66's buyout offer

DCP Midstream ( NYSE: DCP ) +8.2% in early trading Thursday after Phillips 66 ( NYSE: PSX ) made a non-binding offer to buy all publicly held common units of the MLP for $34.75 each, representing no premium to Wednesday's closing price.

Currently, Phillips 66 and Enbridge share ownership in DCP and the Gray Oak pipeline through two separate joint ventures, which will now be merged into a single entity.

The market-based offer will not require a vote from public unitholders, but the deal is contingent upon negotiations between the general partners' board and a conflicts committee.

RBC Capital downgraded DCP Midstream ( DCP ) to Sector Perform from Outperform with a $38 price target, trimmed from $41, "as we expect limited upside to the current offer," also noting that its new PT assumes a ~10% increase in Phillips 66's ( PSX ) offer price.

It took 133 days for Phillips 66 ( PSX ) to close its October 2021 deal to acquire all outstanding units of Phillips 66 Partners .

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