Kirkland & Ellis is repping top US natural gas producer EQT on the acquisition of its former pipeline unit Equitrans Midstream, counselled by Latham & Watkins, in an all-stock deal that will create a company with an enterprise value of more than $35bn.  

The deal continues a surge of consolidation in the US shale oil and gas industry that helped propel energy to become the top sector by M&A deal value in 2023, as businesses pursue greater scale and cost efficiencies in the face of volatile prices.  

EQT said the acquisition would enable it to lower costs to produce its gas by adding more than 2,000 miles of pipelines and create annual synergies of $250m.  

The deal will create America’s first large-scale, fully integrated natural gas company, EQT said in a statement, enabling the company “to compete on the global stage against vertically integrated rivals”.  

Each outstanding Equitrans share will be exchanged for 0.3504 of a share of EQT, representing an implied value of $12.50 per Equitrans share.  

The Kirkland team acting for EQT was led by corporate partners David Feirstein, Cy Jones, Jennifer Gasser and Steven Choi alongside partners Matt Pacey and Lanchi Huynh (both capital markets); Stephen Jacobson and Jared Whalen (both executive compensation); Rachael Lichman and Chad Davis (both debt finance); Chad Smith (real assets); and Dean Shulman, Sara Zablotney and Joe Tobias (all tax).

The deal is the latest to see Kirkland called in to advise aggressively consolidating EQT, with a team led by Feirstein, Jones and Gasser also counselling the company on its $5.2bn acquisition of Tug Hill’s upstream assets and XcL Midstream’s gathering and processing assets last year.  

Meantime the Latham team acting for Equitrans on the EQT deal was led by Houston corporate partners Ryan Maierson and Nick Dhesi. Also working on the matter were partners Jason Cruise and Peter Todaro (both antitrust); Adam Kestenbaum and Matthew Conway (both benefits and compensation); Patrick Nevins (regulatory); Joshua Marnitz (environmental); Tim Fenn and Bryant Lee (both tax); Matthew Jones (finance); and Michelle Gross (IP and data privacy).  

Latham is similarly a longtime advisor to Equitrans, which was spun out from EQT in 2018 following a campaign by activist investment firm Jana Partners. Maierson and Dhesi led a Latham team that guided the company on its $1.8bn take-private of EQM Midstream Partners – another EQT spinoff – in 2020 and have also advised it on various senior notes offerings and a gas compression agreement with EQT.  

Kirkland and Latham proved to be the top two dealmakers of 2023 by value, according to LSEG. Kirkland worked on global deals worth just shy of $400bn to overtake previous market topper Sullivan & Cromwell, while Latham’s work on deals worth $385bn saw it placed second.

Kirkland has worked on a number of multibillion-dollar energy deals announced so far this year, including repping oil producer Callon Petroleum on its $4.5bn acquisition by rival APA, which is being counselled by Wachtell.

Meantime Latham is acting for Canada’s Enerplus in its $11bn merger with US oil and gas company Chord Energy, which is being repped by Wachtell alongside Vinson & Elkins. 

Guggenheim Securities is lead financial adviser to EQT on the Equitrans transaction and RBC Capital Markets is financial adviser to the company. Barclays and Citigroup are financial advisers to Equitrans.  

As a result of the deal EQT’s existing shareholders are expected to own around 74% of the combined company and Equitrans’ shareholders the rest, the companies said.

The deal is expected to close in the fourth quarter.