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Kinder's board approves $15B bid

By ASSOCIATED PRESS
Published August 29, 2006


HOUSTON- Kinder Morgan Inc. said Monday that its board of directors approved a $15-billion buyout plan from the pipeline operator's management to take the company private at a higher per-share price than announced three months ago. The company's shares soared to a 52-week high.

Under terms of the deal, a management-led investment group would pay Kinder Morgan shareholders $107.50 for each share of common stock they hold - a 7.5 percent jump over the original buyout price of $100 per share, the Houston-based company said.

Shares of Kinder Morgan rose $2.57, or 2.5 percent, to $104.27 in New York Stock Exchange composite trading, surpassing the 52-week range of $81 to $103.75.

The new offer from Kinder Morgan chairman and CEO Richard D. Kinder, other senior managers and outside investors represents a 5.7 percent premium over the company's closing stock price on Friday and a 27 percent premium over the closing price on May 26, the last trading day before the group made its initial proposal. The deal remains worth $22-billion, including $7-billion in assumed debt.

The company said Monday that directors unanimously voted to accept the agreement and, pending shareholder and regulatory approval, it is expected to close early next year.

Among Kinder Morgan's assets in Florida is the Central Florida Pipeline Co., which owns and operates a 195-mile refined petroleum products pipeline system that runs from Tampa to Orlando. Kinder Morgan also operates its Tampaplex terminal, formerly known as the IMC Phosphates Port Sutton terminal, in Tampa.

Robert Lane, an analyst with Sanders Morris Harris, said the new price is closer to the true value of the company, which he said could reach $150 to $160 per share. He said last month that he expected the actual buyout price to range from $105 to $110 per share.

Lane added that it was unlikely shareholders would reject the plan, particularly since another bidder hasn't come forward. And any other bidder wouldn't include Kinder.

"He is the marquee name. He's the visionary. Everyone else is an operator or a finance guy," Lane said of the investor group.

Carl Kirst, an analyst with Credit Suisse of North America, said two-thirds of shareholders need to approve the deal - and the buyout team collectively owns 21 percent of the shares. Kinder, who will continue as chairman and CEO of Kinder Morgan, is expected to reinvest all of his 24 million company shares - which is about 18 percent of all shares outstanding.

"The board will continue to assess any future 'superior' offers should any arise, but we don't think they will," Kirst said in a note Monday.

[Last modified August 28, 2006, 23:54:37]


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