Brookfield Asset Management (BN -1.16%) has agreed to acquire an interest in liquefied natural gas (LNG) producer Cheniere Energy Partners (CQP) from private equity giant Blackstone Group (BX), according to a report by Bloomberg. The deal price of $34.25 per unit (slightly below its current price of $38.67 a unit) values Blackstone's 41% interest in Cheniere at roughly $7 billion.
Bloomberg had previously reported that Brookfield was negotiating with Blackstone to acquire its stake in Cheniere Energy Partners, which operates the Sabine Pass LNG export terminal in Louisiana. The two companies have since sealed a deal. According to an SEC filing, Blackstone Infrastructure Partners and Brookfield Infrastructure will team up to acquire the 41% interest in Cheniere currently held by Blackstone Energy Partners. Blackstone Infrastructure will purchase 50.01%, while Brookfield Infrastructure will buy 49.99% of the minority stake. If either entity cannot complete their side of the agreement, the other will have the right to purchase the entire interest.
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Blackstone Group initially made a $1.5 billion investment in Cheniere Energy Partners in 2012. That helped the company finance the development of the Sabine Pass LNG terminal, which started exporting LNG in 2016. The facility currently sells more than 85% of the LNG it produces under 20-year contracts with global LNG traders and utilities. Those agreements generate more than $3.3 billion in fee-based income.
For Brookfield, this investment is its second purchase of a stake in an LNG export facility in the past year, as it also bought a 25% interest in Cove Point LNG from Dominion (D 0.41%) last October. The main attraction of these assets is the stable contractually secured cash flow from the production of a cleaner-burning fossil fuel.
