Energy Transfer to Buy SemGroup

Oil and gas pipeline company Energy Transfer LP said on Monday it would buy smaller rival SemGroup Corp for $1.35 billion and build a 75-mile oil pipeline to strengthen its oil transportation, terminalling and export operations.

Energy Transfer will gain control of SemGroup's crude oil terminal on the Houston Ship Channel, and to connect it with its Nederland, Texas terminal, Energy Transfer said it will construct a pipeline between the two terminals.

Energy Transfer will also add SemGroup's crude oil gathering assets in the DJ Basin in Colorado and the Anadarko Basin in Oklahoma and Kansas, as well as crude oil and natural gas liquids pipelines connecting the DJ Basin and Anadarko Basin with terminals in Cushing, Oklahoma.

The deal, which includes $6.80 in cash and 0.7275 shares of Energy Transfer for each outstanding share of SemGroup, represents a premium of 65.4% to SemGroup's Friday close.

Including SemGroup's debt, the enterprise value of the deal is $5 billion.

The transaction is expected to close in late 2019 or early 2020.

Shares of SemGroup surged 62.4% to $16.70, while that of Energy Transfer fell 2.3% to $13.70 in trading before the bell.

(Reporting by Shradha Singh; Editing by Shinjini Ganguli)