KANSAS CITY, Mo. - Two companies that provide services to the burgeoning shale natural gas industry -- Kansas City-based Inergy and Houston-based Crestwood -- on Monday announced plans to merge.
Once completed, the cash and stock transaction will result in a merged company -- still to be named -- valued at nearly $7 billion. The newly merged firm will be based in Houston and led by Crestwood's current CEO, but will retain a Kansas City executive office, according to a news release. No KC-based jobs will be immediately impacted, a company spokeswoman said.
Both companies supply services for handling natural gas removed from underground shale formations by means of hydraulic fracturing, or "fracking." Examples include natural gas pipelines, processing plants, storage, treatment and compression services.
The deal is expected to close in the third quarter of 2013. Once it does, Inergy Chairman and CEO John J. Sherman and President R. Brooks Sherman Jr. will step down from their day-to-day management roles, although John Sherman will remain a member of the board of directors.
Crestwood is said to bring to the deal extensive relationships and existing contracts with the top shale-gas producers, while Inergy has been focused on ultimate end users, including local gas providers, refiners and petrochemical makers, marketers and producers.
"We view this transaction as a merger of equals through which we are creating a larger, more diversified operating platform that will be highly attractive to investors, customers, creditors and employees," said Robert G. Phillips, chairman, president and CEO of Crestwood.