Blueknight Energy Partners L.P. (NASDAQ: BKEP) shares jumped 40% after announcing a definitive deal and plan of merger under which an Ergon Inc. affiliate will purchase all its preferred and outstanding common units of the company that are currently not held by Ergon or its affiliates. The merger agreement comes at the heels of an offer from Ergon in October last year to purchase Public Preferred and Public Common units of Blueknight.
Ergon to acquire outstanding common and preferred units of Blueknight
Under the terms of the agreement, which will be an all-cash transaction, every Public Common Units holder will get $4.65 for each common unit held. This represents a 51.5% premium over the closing price of Ergon’s offer last year and a 40.5% premium over the preceding 30-day volume-weighted average selling price on April 21, 2022.
Also, every Public Preferred Units holder will get $8.75 for each preferred unit held, representing a high than the 52-week trading peak and a 5.3% premium on the closing price as of October 8, 2021, when Ergon made its offer. The price also reflects a 3.6^ premium to the 30-day weighted average volume on April 21, 2022.
Blueknight Energy Partners G.P. LLC Board of Directors, the company’s general partner, entrusted the power to review, analyze, bargain, and endorse the deal on behalf of the company and the Public Common Units holders to a disputes advisory board of the G.P. Board (the “BKEP Conflicts Committee”), comprising purely of the G.P. Board’s three independent directors (the “BKEP Conflicts Committee”).
Ergon to vote its shares on behalf of the deal
After consulting with independent financial and legal consultants, the BKEP Conflicts Committee voted to approve the deal on behalf of the owners of the Public Common Units. The G.P. Board authorized the deal after receiving the BKEP Conflicts Committee’s advice.
Pursuant to customary clearances, the acquisition is scheduled to completion in mid-2022. Ergon has pledged to vote its shares in favor of the deal.
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