Magellan Midstream stock opened 15% up today: explained here

Shares of Magellan Midstream Partners LP (NYSE: MMP) opened 15% up on Monday after Oneok Inc (NYSE: OKE) said it will buy the petroleum products distributor for $18.8 billion.

What’s in it for Magellan shareholders?

The transaction is expected to complete in the third quarter of the current year and will create an oil and gas infrastructure giant with a pipeline network spanning over 50,000 miles.

Magellan shareholders will receive $25 a share in cash and the remaining 63% will be paid to them in Oneok stock. The press release reads:

Versus the start of the year, Magellan Midstream stock is up roughly 25% at writing.

What’s in it for Oneok Inc?

Oneok expects the acquisition to boost its annual per-share earnings by 3.0% to 7.0% from 2025 through 2027. According to its CEO – Pierce H. Norton II:

The Oklahoma-headquartered firm also sees the deal to translate into a 20% increase (at least) in its average annual free cash flow on a per share basis. Oneok will also assume $5.0 billion of debt that Magellan has on its balance sheet as part of today’s agreement.

Unlike Magellan, oil and gas stock Oneok Inc lost nearly 10% on Monday.