Item 1.01 Entry into a Material Definitive Agreement.
On December 19, 2021, BP Midstream Partners LP, a Delaware limited partnership (the “Partnership”), BP Midstream Partners GP LLC, a Delaware limited liability company and the general partner of the Partnership (the “Partnership GP”), BP p.l.c., a public limited company incorporated under the laws of England and Wales (“BP”), BP Midstream Partners Holdings LLC, a Delaware limited liability company and an indirect wholly owned Subsidiary of BP (“Holdings”), and BP Midstream RTMS LLC, a Delaware limited liability company and a wholly owned subsidiary of Holdings (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into the Partnership, with the Partnership surviving as an indirect, wholly owned subsidiary of BP (the “Merger”).
Under the terms of the Merger Agreement, at the effective time of the Merger, (i) each outstanding common unit representing limited partner interests in the Partnership (each, a “Partnership Common Unit”) other than Partnership Common Units owned by BP and its subsidiaries (each, a “Public Common Unit”) will be converted into the right to receive 0.575 BP American Depositary Shares (“ADSs”) each representing six ordinary shares of BP (the “Merger Consideration” and such ratio, the “Exchange Ratio”). In connection with the Merger, (i) any partnership interests that are owned by the Partnership or any of the Partnership’s subsidiaries will be cancelled; and (ii) the Partnership Common Units owned by Parent and its subsidiaries, the General Partner’s general partner interest and the incentive distribution rights in the Partnership will not be cancelled, will not be converted into the right to receive Merger Consideration and will remain outstanding following the Merger.
Concurrently with the execution of the Merger Agreement, Holdings, as the record and beneficial owner of 56,956,712 Partnership Common Units (the “Covered Units”) as of the date thereof, entered into a Support Agreement with the Partnership (the “Support Agreement” and, together with the Merger Agreement, the “Transaction Documents”) pursuant to which Holdings has agreed to deliver (or cause to be delivered) a written consent with respect to the Partnership Common Units it beneficially owns approving the Merger Agreement and the transactions contemplated thereby, including the Merger (the “Holdings Written Consent”).
The Conflicts Committee (the “Conflicts Committee”) of the board of directors of the General Partner (the “GP Board”) has (a) determined that the Transaction Documents and the transactions contemplated thereby, including the Merger, are not opposed to the interest of the Partnership or the holders of the Public Common Units (the “Unaffiliated Partnership Unitholders”), (b) approved the Transaction Documents and the transactions contemplated thereby, including the Merger (the foregoing constituting “Special Approval” as defined in the Amended and Restated Agreement of Limited Partnership of the Partnership dated October 30, 2017 (the “Partnership Agreement”)), (c) approved, on behalf of the GP Board, the Transaction Documents, the execution, delivery and performance of the Transaction Documents and the transactions contemplated thereby, including the Merger, and (d) directed, on behalf of the GP Board, that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the limited partners of the Partnership (the “Limited Partners”) pursuant to Section 14.3 of the Partnership Agreement and authorized the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement.
The Unaffiliated Partnership Unitholders will receive a Consent Statement/Prospectus following the effectiveness of a registration statement on Form F-4 relating to the Merger Consideration (the “BP Registration Statement”) and at least 20 days prior to the closing of the Merger. The Consent Statement/Prospectus will include a form of consent that may be executed by the Unaffiliated Partnership Unitholders in connection with the Holdings Written Consent after the effectiveness of the BP Registration Statement. Holdings owns Partnership Common Units representing a Unit Majority under the Partnership Agreement. Accordingly, no consent or approval is required from any Unaffiliated Partnership Unitholder to consummate the Merger.
The Merger Agreement contains customary representations and warranties from the parties, and each party has agreed to customary covenants, including, among others, covenants relating to (i) the conduct of business during the interim period between the execution of the Merger Agreement and the effective time of the Merger and (ii) the obligation to use reasonable best efforts to cause the Merger to be consummated.
Completion of the Merger is subject to certain customary conditions, including, among others: (i) approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, by holders of a majority of the outstanding Partnership Common Units, which Holdings has agreed to deliver pursuant to the Support Agreement; (ii) there being no law or injunction prohibiting consummation of the transactions contemplated under the Merger Agreement; (iii) the effectiveness of the BP Registration Statement; (iv) approval for listing of the BP ADSs to be issued as Merger Consideration on the New York Stock Exchange and the underlying BP ordinary shares on the London Stock Exchange; (v) subject to specified materiality standards, the accuracy of certain representations and warranties of each party; and (vi) compliance by each party in all material respects with its covenants.
The Merger Agreement provides for certain termination rights for both BP and the Partnership, including in the event that (i) the parties agree by mutual written consent to terminate the Merger Agreement, (ii) the Merger is not consummated by September 19, 2022, (iii) a law or injunction prohibiting the consummation of the transactions contemplated by the Merger
Agreement is in effect and has become final and non-appealable, or (iv) the other party is in material breach of the Merger Agreement. The Merger Agreement provides that upon termination of the Merger Agreement under certain circumstances, (i) the Partnership will be obligated to reimburse BP for its expenses and (ii) BP will be obligated to reimburse the Partnership for its expenses, in each case, in an amount not to exceed $5 million.
The foregoing description of the Merger Agreement, the Merger and the Support Agreement does not purport to be complete and is qualified in its entirety by the Merger Agreement and the Support Agreement, copies of which are filed as Exhibit 2.1 and Exhibit 10.1 to this Current Report on Form 8-K.
The foregoing summary of the Merger Agreement has been included to provide investors and securityholders with information regarding the terms of the Merger Agreement and is qualified in its entirety by the terms and conditions of the Merger Agreement. It is not intended to provide any other factual information about BP, the Partnership or their respective subsidiaries and affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of such agreement and as of specified dates, were solely for the benefit of the respective parties to such agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the respective parties to such agreement instead of establishing these matters as facts, and may be subject to standards of materiality that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of BP, the Partnership or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in BP’s or the Partnership’s public disclosures.
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