In $1.8B deal, Suburban picks up Inergy to become 3rd-largest propane marketer

Suburban Propane Partners L.P., in the Whippany section of Hanover, today announced it will acquire the retail propane assets and operations of Inergy L.P., in Kansas City, Mo., for $1.8 billion in cash, stock and senior notes, doubling its supply and customer base to create the United States' third-largest propane marketer by volume, Suburban said in a statement.

The acquisition — which is expected to close in the fourth quarter of 2012, pending U.S. Federal Trade Commission review — will expand Suburban's service territory into 11 new states, for a total of 44. According to Suburban President and CEO Michael J. Dunn Jr., the company's annual investor payments will increase to $3.50 per unit — a gain of 2.6 percent.

"We were uniquely positioned to take advantage of this opportunity as a result of all of our efforts over the past several years to streamline our operating model, invest in our technology platform and strengthen our financial position," Dunn said in the statement.

In a separate statement, Inergy CEO John Sherman noted the combined operations will form a "larger and more geographically diverse company."

"Inergy had its roots in the retail propane business, and the decision to exit was difficult," Sherman said. "However, the benefits of this transaction are very compelling to both Suburban and Inergy."

Under the agreement, Suburban will pay Inergy $600 million in common units, $200 million in cash and offer to exchange Inergy's outstanding senior notes for up to $1 billion of its new senior notes.