EQT Corp. (NYSE:EQT) has agreed to a $5.5 billion acquisition of Equitrans Midstream (NYSE:ETRN), its former subsidiary, aiming to establish a major vertically integrated natural gas company, the Wall Street Journal reported Monday.
ETRN shares popped nearly 10% in premarket trading Monday following the report, while EQT stock fell 2%.
The merger is anticipated to create a combined entity valued at over $35 billion, including debt, and is expected to be officially announced later today, the report says. This consolidation seeks to leverage control over both the production and transportation segments of natural gas, utilizing over 2,000 miles of pipeline infrastructure.
A significant part of this strategy includes Equitrans's involvement in the Mountain Valley Pipeline project, which despite delays and opposition, is slated for completion in Q2 2024, costing between $7.57 and $7.63 billion.
Analysts have previously noted that the nearing completion of this project might have made Equitrans a more attractive acquisition target. Earlier this year, Equitrans had begun exploring potential deals after receiving interest from various parties.
In this all-stock deal, Equitrans shareholders will receive 0.3504 shares of EQT for each share they own, equating to $12.50 per Equitrans share. ETRN closed at $11.15 Friday, while EQT had a market valuation of about $16.5 billion.
Post-merger, EQT's current shareholders will hold about 74% of the merged company, with Equitrans shareholders owning the remainder.
The deal will see three Equitrans representatives joining EQT's board, with the unified company's headquarters remaining in Pittsburgh.