Business Context and Reporting Period
This Form 8-K filing by Kinder Morgan, Inc. (KMI) covers the reporting period ending December 7, 2011, with the earliest event reported on December 5, 2011. The filing addresses the ongoing merger transaction between KMI and El Paso Corporation (El Paso), originally announced on October 16, 2011, under which El Paso is set to become a wholly owned subsidiary of KMI.
Key Financial Metrics
This filing is a current report regarding a corporate event and does not contain financial statements, revenue, profit, cash flow, margin, debt, or liquidity metrics. The document focuses exclusively on regulatory developments related to the proposed merger.
Material Changes and Regulatory Status
The primary material update concerns the regulatory review of the merger by the U.S. Federal Trade Commission (FTC).
- Second Request Issued: On December 5, 2011, both KMI and El Paso received a "second request" from the FTC for additional information and documentary material.
- Impact on Timeline: This request extends the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) until 30 days after both parties substantially comply with the requests, unless terminated earlier by the FTC.
- Management Response: The companies stated that a second request is a common occurrence and was not unanticipated. Both parties are cooperating with the FTC staff.
Guidance, Outlook, and Risks
Outlook: Despite the regulatory delay, KMI and El Paso continue to anticipate that the transaction will close in the second quarter of 2012, consistent with previous announcements.
Conditions to Closing: The transaction remains subject to:
- Expiration or termination of the HSR Act waiting period.
- Approval by El Paso stockholders.
- Satisfaction or waiver of other closing conditions specified in the Merger Agreement.
Risks and Contingencies: The filing includes a Safe Harbor for Forward-Looking Statements, noting that actual results may differ due to factors including the ability to consummate the transaction, obtain regulatory and shareholder approvals, secure financing, integrate operations, realize synergies, and changes in economic or energy market conditions.
Additional Filings: KMI has filed a Registration Statement on Form S-4, which has not yet become effective. A definitive Information Statement/Proxy Statement/Prospectus will be mailed to stockholders once the registration is effective.
Key Facts for Investor Verification
- Verify the status of the FTC "second request" and the expected timeline for compliance to confirm the Q2 2012 closing date.
- Review the definitive Information Statement/Proxy Statement/Prospectus once filed for detailed terms of the merger.
- Monitor El Paso stockholder approval status, which is a required condition for the transaction.
- Assess the potential impact of the extended regulatory review on the combined company's integration plans and cost savings.