Shares of Energy Transfer LP ET rose 0.9% in premarket trading Monday, after the pipeline company announced an agreement to buy fellow Texas-based developer of crude oil transport infrastructure Lotus Midstream LLC in a deal valued at $1.45 billion. Under terms of the deal, Energy Transfer will pay $900 million in cash and issue about 44.5 million new shares, representing about 1.44% of the shares outstanding. The deal, which is expected to close in the second-quarter of 2023, is expected to immediately add to Energy Transfer’s free cash flow and distributable cash flow per share, as Lotus’ cash flows are supported by fee-based revenue from fixed-fee contracts. Energy Transfer’s stock has lost 1.7% over the past three months through Friday, while the S&P 500 SPX has gained 3.7%.
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