New York City headquartered investment firm Stonepeak is to add TK LNG Partners (NYSE: TGP) to its $39 billion portfolio of infrastructure and real assets under management. A merger agreement announced today puts an enterprise value of $6.2 billion on Teekay LNG, which is one of the world’s largest independent owners and operators of LNG carriers, with interests in 47 LNG carriers, 21 mid-size LPG carriers, and seven multi-gas carriers. Teekay LNG’s ownership interests in these vessels range from 20 to 100 percent. In addition, Teekay LNG owns a 30 percent interest in an LNG regasification terminal.
“This is a transformative transaction for Teekay LNG that will enable existing unitholders to realize an attractive valuation and immediate liquidity on closing,” commented Mark Kremin, President and CEO of Teekay Gas Group Ltd. “Under Stonepeak’s ownership, we expect Teekay LNG to have improved access to competitively priced capital for both fleet renewal and potential future growth in the next phase of our development, which has not been available through the public equity capital markets for many years. We are excited to partner with Stonepeak and look forward to continuing to build our leading market positions, while maintaining our strong focus on operational excellence. We believe that the combination of our existing management and operations teams with Stonepeak, which has a long track record for investing in energy infrastructure, will provide substantial benefits to our customers, employees, joint venture partners and capital providers in the future.”
“Stonepeak has long recognized the growing global demand for LNG and importance of natural gas as a bridge fuel, particularly as the world continues to shift toward cleaner sources of energy,” said James Wyper, Senior Managing Director at Stonepeak. “Through this transaction, we have an exciting opportunity to invest in a critical energy transition infrastructure business in the form of Teekay LNG’s high-quality, modern fleet of vessels and stable long-term customer contracts. We are particularly excited to partner with Teekay LNG’s best-in-class management team to bring cheaper, cleaner, more reliable energy supply to all parts of the world, especially in Asia where we have been active investors in the ongoing shift to cleaner fuels and renewables.”
The merger is set to close by the end of 2021 and is subject to approval by a majority of Teekay LNG’s common unitholders. Teekay, which currently owns approximately 41 percent of Teekay LNG’s outstanding common units, has entered into a voting and support agreement to vote in favor of the merger.
As part of the transaction, Teekay will transfer to Teekay LNG the ownership of the management services companies that currently deliver the operations for Teekay LNG and certain of its joint ventures under existing management services contracts.