ONEOK nearing completion of $18.8 billion Magellan Midstream acquisition

Magellan Midstream Partners, a significant player in the energy pipeline sector, has received approval from its unitholders for the sale of the company to ONEOK Inc. This sale, valued at $18.8 billion, holds great significance as it will lead to the creation of one of the largest energy pipeline companies in the United States. However, the deal had faced scrutiny from notable shareholders, most notably Energy Income Partners LLC, which expressed concerns about the deal’s tax structure. Despite this opposition, the sale gained momentum.

During the voting process, independent proxy advisory firms Glass Lewis & Co and ISS recommended a vote in favor of the sale, emphasizing its strategic importance and potential benefits. As per preliminary results, an overwhelming majority, approximately 96%, of the votes cast were in favor of the transaction. This clear mandate from the unitholders is a critical step towards finalizing the merger, underscoring its acceptance and potential to reshape the landscape of the energy pipeline industry in the country.

However, one notable aspect of the voting was the unitholders’ decision against the compensation to be paid to executive officers linked to the deal. This outcome signals a conscientious assessment of the compensation structures and financial aspects tied to the merger. According to Magellan’s proxy, although the compensation vote was against, the merger is not contingent upon it. In the event of the acquisition’s approval, executive compensations will be carried out. This reflects the unitholders’ concern for fair and transparent executive compensation practices in major corporate transactions.

Looking at the leadership team, Chief Executive Aaron Milford is expected to receive a substantial compensation package of about $28 million in cash, stock, and benefits post-merger. Similarly, other key executives like Chief Financial Officer Jeff Holman and Michael Mears, the previous CEO, are also set to receive substantial compensation packages, showcasing the significant financial implications of this deal for the leadership team.

While this merger is set to transform the U.S. energy pipeline sector, it will also prompt further evaluation and consideration regarding executive compensation and corporate governance in significant corporate transactions. Magellan expects ONEOK to take into account the outcome of the compensation vote, among other factors, when determining future executive pay. This underlines a broader emphasis on transparent and shareholder-friendly governance practices in major corporate deals and mergers, which is a positive direction for the corporate landscape.

By QUATRO Strategies International Inc.

QUATRO Strategies International Inc. is the leading business insights and corporate strategy company based in Toronto, Ontario. Through our unique services, we counsel our clients on their key strategic issues, leveraging our deep industry expertise and using analytical rigor to help them make informed decisions to establish a competitive edge in the marketplace.

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