DCP - Phillips 66 Grows By Swallowing DCP Midstream

Summary

• PSX announced an agreement Friday to buy the remaining publicly held LP units in DCP Midstream for $41.75 each, raising Phillips 66's stake in DCP to 86.8%.
• The remaining economic interests in DCP are held by Enbridge, which owns 13.2% of the MLP's General Partner.
• PSX expects the acquisition will generate $1 billion of incremental adjusted EBITDA with an additional $300 million of synergies by integrating DCP's assets into PSX's Midstream Segment.
• With a forward P/E of only 5.4x, a current yield of 3.7%, and prospects for another summer of tight refined product markets, PSX is significantly undervalued here.

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