Notable Mergers and Acquisitions of the Day 10/17: (KMI)/(EP) (ANDS) (STO)/(BEXP) (AGP)/(ETP)

• Sunday, Kinder Morgan, Inc. (NYSE: KMI) and El Paso Corporation (NYSE: EP) entered a definitive agreement whereby KMI will acquire all of the outstanding shares of EP in a transaction that will create the largest midstream and the fourth largest energy company in North America with an enterprise value of approximately $94 billion and 80,000 miles of pipelines. The total purchase price, including the assumption of debt outstanding at El Paso Corporation and including the debt outstanding at El Paso Pipeline Partners, L.P. (NYSE: EPB) is approximately $38 billion.
  
  The combined enterprise, including the associated master limited partnerships, Kinder Morgan Energy Partners, L.P. (NYSE: KMP) and EPB, will represent the largest natural gas pipeline network in the United States, the largest independent transporter of petroleum products in the United States, the largest transporter of CO2 in the United States and the largest independent terminal owner/operator in the United States.
  
  The consideration to be received by the EP shareholders is valued at $26.87 per EP share based on KMI’s closing price as of Oct. 14, 2011.
  
  The offer is comprised of $14.65 in cash, 0.4187 KMI shares (valued at $11.26 per EP share) and 0.640 KMI warrants (valued at $0.96 per EP share) based on KMI’s closing price on Oct. 14, 2011. The warrants will have an exercise price of $40 and a five-year term. EP shareholders will be able to elect, for each EP share held, either (i) $25.91 in cash, (ii) 0.9635 shares of KMI common stock, or (iii) $14.65 in cash plus 0.4187 shares of KMI common stock. All elections will be subject to proration and in all cases EP shareholders will receive 0.640 KMI warrants per share of EP common stock. The receipt of shares and warrants by EP shareholders in the transaction is intended to be tax free for U.S. federal income tax purposes. Upon closing, KMI shareholders are expected to own approximately 68 percent of the combined company and EP shareholders are expected to own the remaining 32 percent.
  
  Closing is expected in Q212.
  
  The transaction is expected to be immediately accretive to dividends per share at KMI, distributions per unit at KMP, dividends per share at Kinder Morgan Management (NYSE: KMR) and distributions per unit at EPB. Part of these benefits will be driven by cost savings, which are expected to be approximately $350 million per year, or about 5 percent of the combined system’s EBITDA. Following is a summary of the plans and benefits for each entity.
  
  
• Anadys Pharmaceuticals, Inc. (Nasdaq: ANDS) entered into a definitive merger agreement to be acquired by Roche (OTCBB: RHHBY) for $3.70 per share in cash.
  
  The offer represents a 256% premium over Friday's closing price.
  
  The tender offer is expected to close within the fourth quarter of 2011.
  
  Lazard is acting as financial advisor to Anadys and Cooley LLP is serving as Anadys' legal advisor.
  
  
• Statoil ASA (NYSE: STO) and Brigham Exploration Company (Nasdaq: BEXP) entered into a merger agreement for Statoil to acquire all of the outstanding shares of Brigham for $36.50 per share through an all-cash tender offer.
  
  The Brigham Board of Directors has unanimously recommended to its shareholders that they accept the offer. Ben "Bud" M. Brigham, Chairman, President and CEO and the other executive officers and directors of Brigham, who collectively own approximately 2.5% of the outstanding shares, have agreed to tender all of their shares.
  
  The total equity value is approximately $4.4 billion, reflecting an enterprise value of approximately $4.7 billion, based on June 30, 2011 net debt.
  
  The transaction will provide Statoil with more than 375,000 net acres in the Williston Basin, which holds potential for oil production from the Bakken and Three Forks formations. Brigham also holds interests in 40,000 net acres in other areas. At this early stage of development the risked resource base is estimated at 300-500 million barrels of oil equivalent (boe), equity. Current equity production is approximately 21,000 boe per day, and the acreage has potential to ramp up to 60,000-100,000 boe per day equity production over a five year period.
  
  The Bakken and Three Forks formations are among the largest oil accumulations in the United States. Various sources have estimated the technically recoverable reserves to be in the range of 5 - 24 billion boe, over a 38,000 square kilometers area. The attractiveness of the Bakken and Three Forks plays has resulted in Statoil offering a 36% premium over the average trading price of Brigham stock for the last 30 days.
  
  Closing is expected in Q112.
  
  Tudor, Pickering, Holt & Co. Securities, Inc. and Goldman, Sachs & Co. are acting as financial advisors to Statoil and Vinson & Elkins LLP is acting as legal advisor to Statoil on this transaction.
  
  
• AmeriGas Propane, Inc., general partner of AmeriGas Partners, L.P. (NYSE: APU), announced that AmeriGas Partners had reached a definitive agreement to acquire the propane operations of Energy Transfer Partners, L.P. (NYSE: ETP) for total consideration of approximately $2.9 billion, including $1.5 billion in cash, approximately $1.3 billion in AmeriGas common units, and the assumption of $71 million in debt. Energy Transfer conducts its propane operations in 41 states through subsidiaries including Heritage Operating, L.P. and Titan Energy Partners, L.P. The acquisition of Heritage Propane will add over one million retail propane customers and over 500 million gallons to AmeriGas’s nationwide propane distribution operations.
  
  Closing is expected in Q411.
  
  AmeriGas engaged J.P. Morgan Securities LLC as an advisor for the purpose of providing a fairness opinion to its Board of Directors in connection with the transaction. Shearman & Sterling LLP served as legal advisor to AmeriGas in connection with the transaction.
  
  
• Vertro, Inc. (Nasdaq: VTRO) and Inuvo, Inc. (AMEX: INUV) have entered into a definitive agreement pursuant to which Inuvo will acquire Vertro in an all stock transaction.
  
  Under terms of the agreement, which was unanimously approved by the Board of Directors of each company, at closing of the transaction Vertro will become a wholly-owned subsidiary of Inuvo in a tax-free exchange of shares at an exchange ratio of 1.546 shares of Inuvo common stock per each share of Vertro common stock, or about $2.71 per share. The merger is expected to close in Q411 or Q112, subject to satisfaction of the closing conditions.

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