Devon Energy And Crosstex Energy To Form New Midstream Business - Quick Facts

(RTTNews) - Devon Energy Corp. (DVN), Crosstex Energy Inc. (XTXI) and Crosstex Energy, L.P. (XTEX) announced the signing of definitive agreements to combine substantially all of Devon's U.S. midstream assets with Crosstex's assets to form a new midstream business.

Devon said that the new business will consist of two publicly traded entities: the Master Limited Partnership and a General Partner entity. The New Company is expected to have adjusted EBITDA of approximately $700 million in 2014, before synergies.

The boards of directors of both Devon and Crosstex have unanimously approved the transaction.

The transaction is expected to be immediately accretive to both Crosstex and Devon. A name for the New Company will be announced prior to the closing of the transaction, Devon said.

As per the terms of the definitive agreements, in exchange for a controlling interest in both the new General Partner entity and the Master Limited Partnership, Devon will contribute its equity interest in a newly formed Devon subsidiary or "Devon Holdings" and $100 million in cash.

Under the deal, The new General Partner entity will acquire all shares of Crosstex Energy Inc. in a one-for-one exchange. Upon closing of the transaction, Crosstex Energy, Inc. stockholders will also receive a one-time cash payment of approximately $2.00 per share, or $100 million in aggregate.

Simultaneously, 50% of the equity in Devon Holdings plus $100 million in cash will be contributed to the new General Partner entity in exchange for approximately 70% of the outstanding common units in the General Partner entity. The common units to be received by Devon are valued at $2.4 billion, based on the volume weighted average closing prices of Crosstex Energy Inc.'s shares for the 20 trading days prior to today's announcement.

Devon's remaining 50% equity interest and the general partner interest in Devon Holdings will be contributed to the Master Limited Partnership in exchange for approximately 53% of the outstanding common units in the Master Limited Partnership. The common units to be received by Devon for the contribution of the remaining 50% of equity is valued at $2.4 billion, based on the volume weighted average closing prices of Crosstex Energy, L.P.'s units for the 20 trading days prior to today's announcement.

The transaction is subject to approval by the stockholders of Crosstex Energy, Inc., as well as customary regulatory approvals and closing conditions. It is expected to close in the first quarter of 2014.