Targa Resources to acquire Stakeholder Midstream in $1.25bn deal

Core Insights - Targa Resources has agreed to acquire Stakeholder Midstream for $1.25 billion in cash, enhancing its operations in the Permian Basin [1][2] - The acquisition is expected to close in the first quarter of 2026, pending regulatory approval [3] Company Overview - Stakeholder Midstream provides natural gas gathering, treating, processing services, and crude oil gathering and storage in the Permian Basin, operating approximately 480 miles (772 km) of natural gas pipelines [1][2] - The company has a daily cryogenic natural gas processing and sour treating capacity of around 180 million cubic feet per day [1] Financial Aspects - Stakeholder's assets are supported by long-term, fee-based contracts across approximately 170,000 dedicated acres, with low decline rates ensuring a stable volume profile [2] - Targa anticipates that Stakeholder will contribute around $200 million in annual free cash flow with minimal capital expenditure requirements [4] Strategic Implications - Targa's CEO highlighted that the acquisition is a strategic move to create shareholder value, supported by a stable to modestly growing volume profile and minimal capital needs [3][4] - The company plans to finance the acquisition using available liquidity, including cash on hand and its existing $3.5 billion revolving credit facility, with a limited impact on its leverage ratio [5] Advisory Roles - RBC Capital Markets is acting as the financial advisor to Targa, while Jefferies serves as the exclusive financial advisor to Stakeholder [5][6]