ONEOK Announces $4.4B Acquisition of Brazos Midstream Assets Financed by Apollo's Minority Investment
ONEOK has agreed to acquire the Permian Basin assets of Brazos Midstream for $4.425 billion in cash, with a significant portion of the funding coming from a $9 billion nonvoting minority equity investment managed by Apollo funds. This transaction is expected to reduce ONEOK's 2027 leverage ratio to approximately 3.25 times debt-to-EBITDA without issuing new common shares. The structure includes an IRR cap of 7% for the investor over nine years, which ONEOK views as below its cost of equity capital. The Apollo investment will receive a Class B interest in a holding company with limited rights and no board representation or liquidation preference. Distributions to investors are tied to quarterly cash flow from operations but capped at 7%, while any excess value accrues to common shareholders. ONEOK expects immediate earnings-per-share accretion, increased processing capacity in the Midland Basin, and long-term fixed-fee contracts covering over 600,000 acres. However, risks include cash flow competition from Class B distributions and execution uncertainty around integration and EBITDA forecasts.
Tickers: $OKE
Topics: acquisition debt restructuring financing structure minority investment