A $35 bln gas reunion tracks a topsy-turvy market

Equitrans Midstream

11/03/2024 18:49

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
    By Robert Cyran
       NEW YORK, March 11 (Reuters Breakingviews) - Gas
producer EQT spun off its midstream unit in 2018 to sate
activists. The argument was that pipelines return cash while gas
firms spend it. But that’s no longer true and the operational
logic was thin. Striking amid low gas prices invites scrutiny,
but recombining makes sense.
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    EQT said on March 11 it would buy back Equitrans Midstream
in an all-stock deal that creates a vertically integrated
natural gas provider worth more than $35 billion. Each share in
Equitrans will be exchanged for 0.3504 shares of EQT stock,
worth $13.15 based on closing prices on March 8, the last day
before the deal was announced. That represents a premium of 18%
based on the closing price of Equitrans stock on the same day.
EQT shareholders would own 74% of the combined company.
    In 2017, EQT agreed to buy Rice Energy. In 2018, the
combined company split off Equitrans Midstream, its pipelines
business, under pressure from activist investors Jana Partners
and D.E. Shaw. In 2019, Derek and Toby Rice, who sold Rice
Energy to EQT, won a proxy fight at the new owner. Toby Rice is
now EQT’s CEO.

 (Editing by Jonathan Guilford and Sharon Lam)
 ((For previous columns by the author, Reuters customers can
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