Under the terms of the merger agreement, Oiltanking Partners would merge with a subsidiary of Enterprise in a unit-for-unit exchange.

Unitholders of Oiltanking Partners (other than Enterprise and its subsidiaries) would receive 1.3 Enterprise common units for each Oiltanking Partners common unit.

This exchange ratio represents a 5.6% premium to Oiltanking Partners unitholders based on the respective closing prices for Enterprise and Oiltanking Partners common units on Sept. 30, 2014, the day before the merger was originally proposed.

Relative to the respective closing prices for Enterprise and Oiltanking Partners common units on Nov. 10, 2014, the day before the parties entered into the merger agreement, the 1.3 exchange ratio represents a 10.4% premium to Oiltanking Partners unitholders.

Based on the latest cash distribution declared by Enterprise and Oiltanking Partners with respect to the third quarter of 2014, this exchange ratio would result in a 74% increase in cash distributions for Oiltanking Partners unitholders.

The approval and adoption of the merger agreement require approval by holders of a majority of the outstanding Oiltanking Partners common units. A subsidiary of Enterprise, which will own a sufficient number of Oiltanking Partners common units to approve the merger on behalf of all Oiltanking Partners unitholders, has executed a support agreement with Oiltanking Partners in which it has irrevocably agreed to consent to the merger.

This subsidiary will own approximately 54.8 million Oiltanking Partners common units, or approximately 66% of the total Oiltanking Partners common units then outstanding, following the conversion of approximately 38.9 million Oiltanking Partners subordinated units into common units.

The one-for-one conversion of these subordinated units into common units will occur on Nov. 17, 2014, the business day immediately following payment of the Oiltanking Partners cash distribution scheduled to be paid on Nov. 14, 2014.

Approval and adoption of the merger agreement will be submitted to a vote of the unitholders of Oiltanking Partners.

“The combination of Enterprise’s system of midstream assets and Oiltanking Partners’ access to waterborne markets and crude oil and petroleum products storage assets would extend and broaden Enterprise’s midstream energy services business,” said Michael Creel, CEO of the general partner of Enterprise.

On Oct. 1, 2014, Enterprise announced that it had acquired the general partner and related incentive distribution rights, 15,899,802 common units and 38,899,802 subordinated units in Oiltanking Partners held by Oiltanking Holding Americas Inc.

Upon completion of the merger, which is expected to occur in early 2015, the total consideration paid by Enterprise for the Oiltanking Partners general partner and related incentive distribution rights and the limited partner units
would be approximately $6 billion.