Phillips 66 Partners Holds Secondary Offering to Fund Acquisitions

Underwriters include joint bookrunners Barclays, J.P. Morgan, Bank of America Merrill Lynch, Citigroup, Goldman, Sachs & Co., Morgan Stanley, RBC Capital Markets and Wells Fargo Securities. BNP Paribas, Deutsche Bank Securities, Mizuho Securities, PNC Capital Markets and Scotiabank/Howard Weill are co-managers. The underwriters have a 30-day option on an additional 787,500 units.

Gross proceeds from the offering total around $455 million.

Phillips 66 Partners plans to use the net proceeds from the offering to fund a portion of the purchase price of an acquisition the company announced on Monday. The midstream firm is acquiring equity interests held by Phillips 66 (NYSE: PSX) in three pipeline systems. The transaction is valued at $1.01 billion, and Phillips 66 Partners will pay $880 million in cash and approximately 1.73 million in newly issued units. The new units will be allocated between common units and general partner units “in a proportion allowing the general partner to maintain its 2 percent general partner interest.” The transaction is expected to close in early March.

Phillips 66, through subsidiaries, owns a majority of the common units of Phillips 66 Partners, along with 100% of the subordinated common units and 100% of the general partner units. Prior to this offering, Phillips 66 owned 73.3% of the limited partnership interests in Phillips 66 Partners.

Shares of Phillips 66 Partners closed at $75.50 on Tuesday and traded down about 0.4% in Wednesday morning’s premarket at $75.21. The 52-week range on the common units is $44.03 to $81.63.

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