HOUSTON (AP) — Koch Industries is buying PetroLogistics in a deal valued at approximately $2.1 billion, including debt.
PetroLogistics makes propylene, a widely used building block material that goes into everything from paint and building materials to clothing and automotive parts.
Flint Hills Resources LLC, a subsdiary of Koch Industries Inc., will pay $14 in cash for each outstanding unit of the Houston company. It will pay $12 in cash for each of the common units owned by Lindsay Goldberg LLC, York Capital Management, PetroLogistics' Executive Chairman David Lumpkins and its CEO Nathan Ticatch. The group owns 73 percent of the outstanding common units.
Flint Hills Resources will also take possession of all membership interests in PetroLogistics GP.
PetroLogics said Wednesday that it expects to continue making quarterly distributions until the deal closes, likely before the end of the year. If the closing occurs before the announced record date for any quarterly distribution, the record date will be the business day immediately before the transaction's closing date.
PetroLogistics will also make a final, one-time cash distribution in connection with, and conditioned upon, the deal's closing. That is expected to approximate the distribution that would have been earned through the closing date, subject to an additional reserve of approximately $12.3 million to cover transaction-related costs. The record date for the cash distribution will be the business day immediately before the acquisition's closing.
PetroLogistics has until July 6 to hold talks with other potential bidders, but must give Flint Hills the opportunity to match any competing bid. It is also subject to a $57 million termination fee.
The boards of Flint Hills Resources and PetroLogistics LP have already approved the deal.