Kinder Morgan will sell some of its assets as part of an agreement with federal regulators to clear the way for its $20.7 billion buyout of El Paso.
The Houston pipeline company said Thursday that the divestments are needed in order to secure the approval of the Federal Trade Commission. It said it reached a "verbal tentative agreement" with FTC staff, who said that the sale of certain businesses would suffice and clear the way for the creation of the nation's largest natural gas pipeline operator.
Those assets include Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Company, natural gas processing and treating facilities in Wyoming, and a 50-percent stake in the Rockies Express Pipeline.
"We would prefer to retain all of these assets, but as we anticipated when the transaction was announced, we must sell certain assets in the Rockies to obtain FTC approval," Kinder Morgan Chairman and CEO Richard Kinder said.
Kinder Morgan Inc. said it would buy El Paso Corp., also of Houston, in October. The combined entity will operate more than 80,000 miles of natural gas pipeline.
El Paso shareholders approved the deal earlier this month.
In morning trading, Kinder Morgan shares gave up 11 cents to $35.94 while El Paso shares rose by 38 cents to $28.89.