Kinder Morgan to Acquire Kinetrex Energy for $310M

Energy infrastructure company Kinder Morgan, Inc. (KMI) announced that it has agreed to acquire liquefied natural gas (LNG) supplier Kinetrex Energy from an affiliate of Parallel49 Equity for $310 million. The deal is likely to close in the third quarter of 2021.

Following the news, shares of the company declined 1.2% in Friday’s trading session and closed at $17.71 in the extended trading session.

With this buyout, Kinder Morgan will gain access to two small-scale production and fueling facilities, a 50% interest in a landfill renewable natural gas (RNG) facility, and three additional RNG facilities with signed commercial arrangements.

Kinder Morgan believes the purchase to be value accretive to its shareholders as the three RNG facilities become operational over the next 18 months. Further, the acquisition price and additional capital expenditures are six times less than the expected 2023 EBITDA.

The President of Kinder Morgan Energy Transition Ventures (ETV), Jesse Arenivas, said, “We have been focused on RNG due to its potential to grow rapidly in the near term and deliver attractive returns, with landfills providing a low cost, predictable and long-term feedstock. The team at Kinetrex has developed an outstanding business model and platform for future growth in a fragmented market, and we are excited to welcome them to Kinder Morgan.” (See Kinder Morgan stock chart on TipRanks)

Recently, TD Securities analyst Linda Ezergailis reiterated a Buy rating on the stock. The analyst, however, raised the price target from $20 to $21, which implies an upside potential of 19.1% from current levels.

Consensus among analysts is a Hold based on 2 Buys, 7 Holds, and 3 Sells. The average Kinder Morgan price target stands at $18.09, which implies upside potential of 2.6% from current levels. Shares have gained 21.7% over the past year.