ONEOK surprises with planned EnLink acquisition – Investors remain skeptical

The ONEOK stock showed significant losses of 6.7% today. The reason for this is the company's recently announced decision to acquire the remaining shares of EnLink Midstream for $4.3 billion. This decision has raised concerns among investors because approximately 37 million new shares are to be issued following the completion of the acquisition, which would represent about 6% of the total outstanding shares. In addition to the dilution of the shares, experts believe that questions about the successful integration of the acquired company and the management of the additional debt load contribute to investor skepticism. ONEOK has signed a definitive merger agreement, under which the remaining shares of EnLink will be converted into ONEOK shares. Specifically, each outstanding unit of EnLink will receive 0.1412 shares of ONEOK. The transaction, expected to be completed in the first quarter of fiscal year 2024/25, will impact about 6% of the total shareholdings. Already in September, ONEOK acquired the entire EnLink stake from GIP for $3.3 billion in cash. The uncertainties regarding the new share issuance and the associated dilution, as well as the company's ability to manage the increased debt load, are currently leading to a loss of investor confidence. ONEOK will need to prove in the coming months that it can successfully integrate the complex acquisition to regain investor trust and drive the stabilization of the stock price.