Boston, MA 08/13/2014 (wallstreetpr) – Kinder Morgan Inc (NYSE:KMI) announced plans to bring together its pipeline companies. The objective is to streamline the company that can go for further acquisitions in futures. It has plans to invest $44 billion in the process. Despite the positive news, some investors in the company’s limited partnerships consider the consolidation as a risk that can invite unexpected tax bills in the future.
The news
Kinder Morgan Inc (NYSE:KMI) has said that it will consolidate three affiliated companies. The two companies out of the three affiliated companies are organized as MLPs. The trend of MLPs has increased in last few years and accounts for a huge market of $560 billion. It has remained an effected way to raise funds and issue debt backed by pipelines.
The CEO, Richard Kinder said that investors would benefit from the publicly traded MLPs including El Paso Pipeline Partners, L.P. (NYSE:EPB) and Kinder Morgan Energy Partners LP (NYSE:KMP). The investors will benefit from the dividend growth from the surviving company. It is considered to be much more rewarding than the payouts at MLPs. As per the new deal, the three Kinder-related firms will get cash and shares in Kinder Morgan. The investors might have to move cash to other MLPs. The new-structured company can move strong on the growth path.
The concerns
Investors are assured about the returns from the surviving company. But they are looking for the clear answers as to how the Kinder Morgan Inc (NYSE:KMI) will enhance the payouts from the partnerships. The company has to get the high-return large projects to ensure meaningful return to the investors. It can force the other MLPs to opt for mergers or other deals. Individual investors can be a higher risk to get unwelcome tax bills. The market has ignored the concerns linked to the deal. Kinder Morgan posted gains of more than 9% after the news.
