LONDON (ShareCast) - Kinder Morgan, the US pipeline giant, will put all its publicly traded units under one roof in a $70bn (£41.7bn) deal, the company announced on Sunday.

The group said the decision came in response to investor concerns over growth prospects and a complicated financial structure and the company said it would fold its units into a single company, with a market capitalisation of $92bn (£54.8bn).

Kinder's new structure will see the company abandon the tax-advantaged legal structure, Master Limited Partnership (MLP), the company had made popular during the US shale boom.

Kinder Morgan Management (KMR), Kinder Morgan Energy Partners (KMP) and El Paso Pipeline Partners (EPB) are among the branches involved in the deal, which consists of $40bn (£23.8bn) in Kinder Morgan equity, $4bn (£2.4bn) in cash and $27bn (£16bn) in assumed debt.

Shareholders of KMR, KMP, and EPB were set to receive a premium of between 15.4% and 16.5% for their shares.

Rich Kinder, the group's chairman and chief executive officer (CEO), had come under scrutiny from investors and last month he declared that Kinder was looking into combining some of its companies.

The company's overall valuation was hampered because it traded as four separate entities, thus making it complicated for the market to understand it, a source told Reuters.

Kinder considered the option of merging all the branches into a single MLP but stopped short of doing so as MLPs, which pay no taxes if they distribute their earnings to investors, have been placed under even greater scrutiny in recent months.

The approval for new MLPs that differ from the standard pipeline blocked was blocked by the Internal Revenue Service this year.

The new structure will see bigger income tax savings and dividend increases of about 10% a year between 2015 and 2020, the company said in a statement, adding that it was forecasting a dividend payout of $2 (£1.18) in 2015, a 16% increase over the anticipated 2014 dividend.

"This combined entity will be the largest energy infrastructure company in North America and the third largest energy company overall," Kinder's CEO said in a statement.

Up until Monday's changes the companies were hampered by a stubbornly high cost of capital as a result of their complex structure.

Kinder shares were up 6.22% to $38.37 at 15:27 on Monday.

DC

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