Dan Duncan, who is a billionaire, understands the importance of patience (especially in creating lots of wealth). An example of this is his latest deal; that is, his company, Enterprise Products Partners LP (NYSE: EPD), has been pursuing Teppco Partners LP (NYSE: TPP) since March. At that time, Duncan offered about $2.8 billion for the company. And yes, according to the senior management at Teppco, it was too low.
Well, after some wrangling, there is now a deal. Of course, the price tag is higher -- at $3.3 billion (it's a stock-for-stock swap).
OK, what's special about all this? Keep in mind that Duncan actually has a controlling interest in both entities. Obviously, this poses conflict-of-interest problems. It also racks up the fees for advisors and lawyers.
So, why combine the two? Teppco has an attractive collection pipelines, particularly one that goes from the Gulf Coast to the Northeast. These are generators of consistent cash flows (which is certainly a good thing in volatile energy marketplace -- especially lately).
In all, the new entity will be a powerhouse. There will be about 48,000 miles of pipelines, as well as 200 million barrels of natural gas and other energy products. Also, the merger should result in at least $20 million in cost savings -- thus helping boost earnings in 2010.
Oh, and Duncan has a long history of structuring beneficial M&A deals (he got his start in dealmaking in the late 1960s). Yes, that's something else that has produced a good number of billionaires.
Tom Taulli is the author of various books, including The Complete M&A Handbook,
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