DCP Midstream Partners LP DPM.N said it had acquired the assets of a joint venture between Phillips 66 (PSX.N) and Spectra Energy Corp SE.N, to create the largest natural gas liquids producer and gas processor in the United States.
The combined company, which has an enterprise value of $11 billion, will be renamed DCP Midstream LP and will trade with the ticker symbol "DCP" on the New York Stock Exchange.
The deal will simplify the company's corporate structure, Wouter van Kempen, chief executive of DCP Midstream and DPM, said.
Energy infrastructure companies are looking to simplify their complex corporate structures to reduce operating costs.
The deal comes after pipeline companies Sunoco Logistics Partners LP (SXL.N) and Energy Transfer Partners (ETP.N), both of which are controlled by general partner Energy Transfer Equity LP (ETE.N), said in November they would combine.
DPM is managed by its general partner, DCP Midstream GP LP, which in turn is managed by an entity owned by DCP Midstream LLC.
As part of the deal, the joint venture, DCP Midstream LLC, will pay DCP Midstream Partners (DPM) $424 million in cash and get 31.1 million DPM units.
DPM will also assume $3.15 billion of DCP Midstream LLC's debt.
DPM said on Wednesday it would build a new 200 million cubic feet per day (mmcf/d) processing plant to increase its capacity in Colorado's Denver-Julesburg basin by 50 percent. The plant is expected to come online in late 2018.
The company would also expand its natural gas liquids capacity on Sand Hills pipeline by 30 percent to 365,000 barrels per day. The pipeline moves natural gas liquids from the Permian basin and Eagle Ford to Mont Belvieu, Texas.
BofA Merrill Lynch acted as financial adviser to DCP Midstream LLC, while Evercore acted as financial adviser to DPM for the deal.
Bracewell acted as legal counsel to DCP Midstream LLC, while Andrews Kurth Kenyon and Richards, Layton & Finger acted as legal counsel to the conflicts committee of DPM's board.
(Reporting by Swetha Gopinath and Arathy S Nair in Bengaluru; Editing by Shounak Dasgupta)