OKE - Oneok-Magellan Midstream Megamerger: Why Are Both Stocks Moving in Opposite Directions Today?
2023-05-15 12:14:04 ET
In a megadeal announced this past weekend, Oneok (NYSE: OKE) and Magellan Midstream Partners (NYSE: MMP) are combining forces to create one of the largest oil and gas infrastructure companies in the U.S. The two pipeline stocks, however, aren't receiving the same love from the markets today: While shares of Magellan were surging 15% as of 11:20 a.m. ET Monday, Oneok stock was down 7.7% as of that time.
Oneok will acquire Magellan Midstream in a cash-and-stock deal valued at nearly $18.8 billion, including assumed debt. The deal is expected to close in the third quarter. Every Magellan Midstream shareholder will receive $25 in cash and 0.6670 shares of Oneok for every Magellan share they own. The implied value of $67.5 per share, based on the closing prices of both stocks on May 12, represents a 22% premium for Magellan Midstream shareholders.
That explains why shares of Magellan Midstream are surging today. Crude oil and natural gas prices have tumbled this year on fears of a recession and oversupply. Receiving a 22% premium on their shares, therefore, looks like a lucrative offer.
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Oneok-Magellan Midstream Megamerger: Why Are Both Stocks Moving in Opposite Directions Today?