Targa Acquires Remaining 25% of Grand Prix From Blackstone Energy Partners in Value-Neutral Deal

Targa Resources has agreed to buy the remaining 25% of the Grand Prix pipeline it does not own from Blackstone Energy Partners for $1.05 billion. We consider the Grand Prix pipeline one of Targa’s most valuable assets, so complete ownership is certainly helpful, and the valuation multiple of 8.75 times 2023 EBITDA is reasonable. The deal will boost Targa’s reliance on fee-based income, and after incorporating the deal into our model, we expect leverage to remain comfortable at about 3.5 times for 2023. Since we view the multiple as fair for the asset, our fair value estimate and no-moat rating remain unchanged.