KMP is up big pre-market. Here is more information on the deal
http://seekingalpha.com/article/2408...&uprof=45&dr=1
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First, let's address the core financial parameters of the deal. KMP holders will receive 2.1931 shares of KMI and $10.77 in cash, which translates to an 11.4% premium. KMR holders will receive 2.4849 shares of KMI for a premium of 16%. As a reminder, KMR is merely an LLC that holds KMP units and reinvests distributions. EPB holders will receive .9451 shares of KMI and $4.65 in cash for a 15% premium. Thanks to this deal, KMI expects to increase its 2015 payout to $2.00 from $1.72. It also aims to grow its dividend by 10% annually through 2020.
Now while KMP is being sold at a premium, it should be noted that investors will see less cash flow up-front. In 2015, KMP was on track to pay out at least $5.75. With the $2 anticipated dividends, KMP holders will now receive about $4.39 per KMP unit from their new KMI holding. Even if they were to automatically reinvest their $10.77 cash payment, their dividends will be about 14% lower. Functionally, with the new tax status, the payout will be a bit lower. At first glance, this might upset some KMP holders, especially those in retirement who rely on the distributions. That's an understandable but short-sighted reaction.
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