On February 17, 2016, Targa Resources Corp. (NYSE:TRGP) acquired all of the outstanding common units of Targa Resources Partners LP (NYSE: NGLS) that it did not already own (the “Merger”). All of NGLS's debt and preferred units outstanding at acquisition close remained outstanding.
The Merger closed prior to the market open on February 17, 2016.
NGLS common unitholders received 0.62 shares of TRGP stock for each common unit of NGLS stock owned, as well as cash in lieu of any fractional TRGP shares after conversion.
The receipt of TRGP shares and cash in lieu of fractional shares, if any, in exchange for NGLS common units pursuant to the Merger will be a taxable transaction to U.S. holders for U.S. federal income tax purposes. In general, the Merger will be treated as a taxable sale of a U.S. holder’s NGLS common units in exchange for the TRGP shares and cash in lieu of fractional shares, if any, received in the Merger.
A U.S. holder who receives TRGP shares and cash in lieu of fractional shares, if any, in exchange for NGLS common units pursuant to the Merger will recognize gain or loss in an amount equal to the difference between (i) the sum of (A) the fair market value of the TRGP shares received at the time the transaction closed, (B) the amount of any cash received, and © such U.S. holder’s share of NGLS’s nonrecourse liabilities immediately prior to the Merger and (ii) the U.S. holder’s adjusted tax basis in the NGLS common units exchanged therefor (which includes such U.S. holder’s share of NGLS’s nonrecourse liabilities immediately prior to the Merger).
For more information on the taxability of the merger, please refer to the “Material U.S. Federal Income Tax Consequences” section of the definitive joint proxy statement/prospectus filed by TRGP and NGLS with the Securities and Exchange Commission on January 11, 2016.
A U.S. holder’s tax basis in any shares of TRGP common stock received in the NGLS merger is $17.25 per share, which was the closing price of TRGP common stock on February 16, 2016. The transaction closed prior to market open on February 17, 2016.
A U.S. holder’s holding period for any shares of TRGP common stock received in the Merger on February 17, 2016, begins on February 17, 2016. The Merger closed prior to market open on February 17, 2016. Therefore, a shareholder that acquired shares of TRGP common stock in the Merger had the opportunity to sell those shares on February 17, 2016.
A final 2016 K-1 will be available to NGLS common unitholders in early 2017. However, it will not summarize the final gain/loss associated with the NGLS common units held. The holder and/or their tax advisor will have to calculate final gain/loss as described above in the question “What are the expected U.S. federal income tax consequences of the transaction for former NGLS common unitholders?”.
Targa Resources Corp. (NYSE: TRGP) is classified as a corporation for U.S. federal income tax purposes. TRGP shareholders receive an annual IRS Form 1099-DIV for their dividend income.
Given its classification as a corporation for U.S. federal income tax purposes, TRGP pays a qualified dividend, which will generally be included in an investor’s ordinary dividend income. Please consult a tax advisor about the tax consequences of dividend earnings and refer to “Material U.S. Federal Income Tax Consequences” section of Form S-4 filed with the SEC on December 3, 2015.
At this time, Targa Resources Corp does not have a direct purchase plan. Shares can be purchased through the brokerage firm of your choice.
No, Targa Resources Corp does not have a DRIP.
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