(Reuters) - Pipeline companies Sunoco Logistics Partners LP and Energy Transfer Partners (ETP), both of which are controlled by general partner Energy Transfer Equity LP, said on Monday they would combine in a corporate consolidation to cut borrowing and operating costs.
ETP is the main company behind the controversial $3.7 billion Dakota Access Pipeline, which has been delayed since September, when federal regulators decided to re-review permitting for the project to cross land owned by the federal government.
The companies said they expect the combined company's greater scale and diversity to strengthen its balance sheet and projected that the deal will create more than $200 million in yearly commercial cost savings by 2019.
Still, units of both companies fell in morning trading on Monday. Sunoco Logistics were down around 7.6 percent to $24.20 at midday, while ETP's units were down 6.6 percent at $36.77.
ETE units, meanwhile, were up 3 percent in midday trade at $17.81.
Sunoco Logistics will buy Energy Transfer Partners in an all-stock deal valued at $19.93 billion, creating the second-largest master limited partnership by enterprise value.
ETP shareholders will get 1.5 Sunoco units for each ETP unit they own. As of Friday's close, that was about $39.29 per unit, a slight discount to what ETP units were worth. [nBw7xjF0sa]
Energy Transfer Equity walked away from its more than $20 billion takeover of Williams Cos Inc earlier this year after months of lawsuits and heated arguments between the rival pipeline companies. [nL4N19L44Q]
(Reporting by Michael Erman in New York and Vishaka George in Bengaluru; Editing by Martina D'Couto and Meredith Mazzilli)
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