ONEOK has agreed to acquire Brazos Midstream's Permian Midland Basin gathering and processing assets for $4.425 billion in cash, funded through a $9 billion minority equity investment from Apollo. The deal more than doubles ONEOK's Midland Basin processing capacity and is expected to close in Q4 2026.
ONEOK has entered into a definitive agreement to acquire Brazos Midstream's Permian Midland Basin natural gas gathering and processing assets for $4.425 billion in cash. The company plans to fund the purchase through a $9 billion nonvoting minority equity investment from funds managed by Apollo, directing $5 billion of the proceeds toward reducing existing debt.
Deal terms and expected returns
The transaction implies a multiple of approximately 7.5 times estimated 2027 EBITDA, including approximately $80 million of full-year synergies, and approximately 6.0 times estimated 2028 EBITDA. ONEOK stated the acquisition is expected to be immediately accretive to earnings and free cash flow per share.
The Apollo equity investment carries an internal rate of return capped at 7.0% for the first nine years. It will be reported as a noncontrolling interest within permanent equity under GAAP, and Apollo will receive a Class B interest in a newly formed holding company with no board representation or liquidation preference.
What ONEOK is buying
The acquired assets include approximately 600,000 dedicated acres under long-term fixed-fee contracts with a weighted average remaining term exceeding 12 years. Once the Cassidy II processing plant is complete, expected in Q3 2027, the system will include approximately 700 miles of gathering infrastructure and 1.2 billion cubic feet per day of processing capacity. The acquisition more than doubles ONEOK's Midland Basin processing capacity to approximately 2.3 billion cubic feet per day.
Debt reduction and timeline
ONEOK intends to extinguish approximately $5 billion of existing debt, which is expected to reduce pro forma 2027 leverage to approximately 3.25 times debt-to-EBITDA. The Brazos Midland acquisition is expected to close in Q4 2026, subject to customary closing conditions including Hart-Scott-Rodino Act clearance, while the minority equity investment is expected to close in the first half of September.
Barclays served as sole financial advisor on the acquisition and lead financial advisor on the equity investment. RBC Capital Markets advised Apollo.
Source: Investing.com
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