Kinder Morgan Inc (NYSE:KMI) plans on bringing all its entities together- formation of C-Corporation through a $40 million deal

Kinder Morgan Inc (NYSE:KMI), the top most pipeline company of United States, announced on Sunday that it will bring all of its publicly exchanged units in one place. The company, answering investors concerns about the Kinder Morgan Inc’s financial structure and future growth, said that it will do so through a $40 million deal.

The gas and oil company said that it would use the legal tax advantaged structure, Master Limited Partnership (MLP), to bring the units under one roof with the name of C-corporation that would have a total of $92 billion market capitalization.

The units that Kinder Morgan Inc (NYSE:KMI) plans to bring together are Kinder Morgan Energy Partners LP (NYSE:KMP), El Paso Pipeline Partners, L.P. (NYSE:EPB) and Kinder Morgan Management LLC (NYSE:KMR). According to the news, the deal offers $4 billion in cash, $4 billion in Kinder Morgan Inc (NYSE:KMI) stocks and $27 billion in debt.

Rick Kinder, the chief executive officer of Kinder Morgan Inc (NYSE:KMI), who also holds the chairmanship of the company, was under great pressure from the investors. The CEO of Kinder Morgan Inc (NYSE:KMI), during an earnings meeting of Kinder Morgan Energy Partners LP (NYSE:KMP), said that the companies of Kinder were being estimated and evaluated.

Sources have it that the company’s overall valuation came down lower for the investors, more often than not, struggled to understand the four entity system of the company. Moreover, the MLP plan required the Kinder entities to hand over around 40 percent of the total cash to the partners, hurting the ability of Kinder Morgan Inc (NYSE:KMI) to make acquisition deals.

According to some sources, the company once considered putting all the entities into one MLP. However, the MLPs that pay bulks of profits to their investors in the form of earnings are under great scrutiny these days.

This year, Internal Revenue Service refused to give its approval to a number of MLPs that moved away from the traditional model.

Kinder Morgan Inc (NYSE:KMI) said the new structure that it will adopt will allow better dividend rates and greater tax savings. Sources have it that the deal will be closed by the end of the year 2014. The company expects a dividend of $2 for the year 2015; an increase of 16 percent can be seen when compared with the predicted 2014 dividend rate of $1.72.

The chief executive of Kinder Morgan Inc (NYSE:KMI) further said that the combined company will be the 3rd largest energy corporation in the world and the largest one in the region of North America.

The company was founded by Kinder Morgan in 1997; it had a total of 175 employees back then, and now it has around 11,000 employees. According to Forbes, Kinder Morgan Inc (NYSE:KMI) is worth $10 billion.

Kinder Morgan Inc (NYSE:KMI) designed the MLP structure, which around 100 energy companies have adopted up till now. The acquisition deal of the company is much important for it will mean a pullback from the plan that Kinder Morgan Inc (NYSE:KMI) had once created.