Phillips 66 Project Development Inc. made a non-binding proposal to acquire a 43.5% stake in DCP Midstream, LP (NYSE:DCP) for $3.2 billion on August 17, 2022. Phillips 66 Project Development Inc. entered into an agreement to acquire a 43.5% stake in DCP Midstream, LP for $3.8 billion on January 5, 2023. Phillips 66 Project plans to fund the acquisition through cash and debt. Subject to negotiation and execution of a definitive agreement, Phillips 66 Project is proposing consideration of $34.75 for each outstanding publicly-held common unit of DCP Midstream as part of a transaction that would be structured as a merger of DCP Midstream with an indirect subsidiary of Phillips 66 (NYSE:PSX) with DCP Midstream as the surviving entity. Under the agreement, Phillips 66 Project increased a consideration per share to $41.75. As a result of the Merger, Phillips 66?s economic interest in the Partnership will increase from 43.3% to approximately 86.8%. Enbridge Inc.?s economic interest in DCP Midstream, LP will remain unchanged at approximately 13.2%. The Common Units of DCP Midstream, LP owned by DCP Midstream, LLC and DCP Midstream GP, LP will be unaffected by the Merger and will remain outstanding immediately following the Merger. DCP Midstream, LLC and DCP Midstream GP, LP together own approximately 56.5% of the Common Units issued and outstanding as of December 30, 2022. Phillips 66 raised $1.5 Billion Term Loan from Sumitomo Mitsui Banking Corporation, TORONTO DOMINION BANK, Mizuho Bank, Ltd. Truist Bank, MUFG Bank, Ltd. and Goldman Sachs. Mizuho Bank Ltd. acted as administrative agent on a $1.5 Billion Term Loan to Phillips 66. The closing was timed to coincide with Phillips 66?s $1.25 Billion public notes offering. Funds from the term loans and notes offering will be used to finance Phillips 66?s purchase of DCP Midstream LP. DCP Midstream will pay to Phillips 66 up to a maximum amount of $3 million, if the merger agreement is terminated DCP Midstream under certain circumstances.

The proposed transaction is subject to the negotiation and execution of a definitive agreement and approval of such definitive agreement and transactions contemplated thereunder by the board of directors of the general partner of DCP Midstream and a conflicts committee thereof. The consummation of the proposed transaction would also be subject to customary closing conditions. The Board of DCP has authorized a Special Committee comprised of independent members of the Board to review, evaluate and negotiate the proposed transaction. The Merger Agreement and the transactions contemplated thereby, including the Merger, were unanimously approved by the special committee of DCP and the Board of Directors of Phillips 66. Affiliates of Phillips 66, as the holders of a majority of the outstanding DCP Midstream common units, have delivered their consent to approve the transaction. On April 1, 2023, DCP Midstream employees transitioned into Phillips 66. Transaction is expected to close in the second quarter of 2023. As of May 3, 2023, the transaction is expected to close by the end of the second quarter of 2023.

Phillips 66 Project engaged Barclay's Capital Inc. as financial advisor and William S. Anderson of Bracewell LLP as legal counsel. Morris, Nichols, Arsht & Tunnell LLP acted as special Delaware counsel to Phillips 66 Project. John Goodgame of Akin Gump Strauss Hauer & Feld LLP represented Evercore which acted as financial advisor and fairness opinion provider to the special committee of the board of directors of DCP and G. Michael O?Leary and R.V. Jewell of Hunton Andrews Kurth LLP and Srinivas M. Raju and Kenneth E. Jackman of Richards, Layton & Finger, PA acted as legal counsel to the special committee. Sidley Austin LLP acted as legal advisor to DCP Midstream, LP. Jeff Butler and Tom Perich of Hunton Andrews Kurth Represents Mizuho Bank Ltd. and lenders. Evercore Group L.L.C., Richards, Layton & Finger, P.A. and Hunton Andrews Kurth LLP acted as due diligence providers to DCP. DCP has agreed to pay Evercore a fee of $1,500,000 upon rendering its opinion and a closing fee of $1,000,000 upon the closing of the Merger. Evercore also accrued a fee of $500,000 upon execution of its engagement letter with the Partnership and the Special Committee. Phillips 66 Project will pay Barclays an advisory fee of up to $6,000,000.

Phillips 66 Project Development Inc. completed the acquisition of 43.5% stake in DCP Midstream, LP (NYSE:DCP) on June 15, 2023. Effective with the opening of markets today, DCP Midstream?s common units will no longer be listed on the New York Stock Exchange.