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Merger FAQ
ONEOK, Inc. (“OKE” or “ONEOK”) Acquisition of Magellan Midstream Partners, L.P. (“MMP” or “Magellan”) Tax Questions
Frequently Asked Questions (FAQs)
On September 25, 2023, ONEOK, Inc. (NYSE: OKE) acquired all of the outstanding common units of Magellan Midstream Partners, L.P. (MMP) in a cash and stock transaction. Common units of Magellan are no longer publicly traded.
THIS DOCUMENT IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONTAIN A COMPLETE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL U.S. FEDERAL, STATE, LOCAL, AND NON-U.S. INCOME TAX CONSEQUENCES RELATED TO THE TRANSACTION, INCLUDING THE RECEIPT, OWNERSHIP AND DISPOSITION OF SHARES OF ONEOK COMMON STOCK RECEIVED IN THE TRANSACTION. EACH HOLDER OF MAGELLAN MIDSTREAM PARTNERS COMMON UNITS IS STRONGLY URGED TO CONSULT WITH AND RELY UPON ITS OWN TAX ADVISOR AS TO THE SPECIFIC U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES TO SUCH HOLDER RELATED TO THE TRANSACTION, INCLUDING THE RECEIPT, OWNERSHIP AND DISPOSITION OF SHARES OF ONEOK COMMON STOCK RECEIVED IN THE TRANSACTION, TAKING INTO ACCOUNT EACH HOLDERS’ OWN PARTICULAR CIRCUMSTANCES.
2023 Schedule K-1s are expected to be available online at www.taxpackagesupport.com/mmp by March 5, 2024, and mailed shortly after.
FREQUENTLY ASKED QUESTIONS (FAQS)
1. WHEN DID THE TRANSACTION CLOSE?
The transaction closed on September 25, 2023.
The exchange of MMP units for OKE common stock and cash should be treated as a sale of your MMP units in a taxable transaction for U.S. federal income tax purposes.
In determining the amount of total proceeds, the amount realized per unit on the sale includes 0.667shares of OKE common stock (valued at the closing price of OKE on the closing date of the transaction, which was $66.54) and $25 cash for a total consideration value of $69.38 per unit. If you have specific tax related questions, please contact a tax advisor familiar with partnership taxation and specifically the taxation of Master Limited Partnership unitholders. ONEOK’s investor relations department is not staffed by tax personnel and ONEOK personnel do not provide tax advice.
THE LINK TO THE TAX PACKAGE SUPPORT WEBSITE IS PROVIDED FOR CONVENIENCE ONLY, AND THE INFORMATION CONTAINED ON THE TAX PACKAGE SUPPORT WEBSITE IS EXPRESSLY NOT INCORPORATED BY REFERENCE INTO THIS DOCUMENT. YOUR ORIGINAL BASIS INFORMATION WAS PROVIDED TO THE OPERATOR OF THE TAX PACKAGE SUPPORT WEBSITE BY YOUR BROKER AND YOU SHOULD CONSULT YOUR BROKER AND TAX ADVISOR TO CONFIRM YOUR BASIS INFORMATION. ONEOK DOES NOT OPERATE THE WEBSITE, CANNOT GUARANTEE THE ACCURACY OF THE INFORMATION ON THE WEBSITE AND DISCLAIMS ANY RESPONSIBILITY FOR SUCH INFORMATION.
3. WHAT TAX DOCUMENTS WILL I RECEIVE AFTER THE CLOSE OF THE TRANSACTIONS?
MMP unitholders will receive a final Schedule K-1 and supporting materials. Final Schedule K-1s are expected to be available online at www.taxpackagesupport.com/mmp by March 5, 2024, and mailed shortly after.
4. WHAT IS MY TAX BASIS IN MY NEW SHARES OF OKE?
A U.S. holder’s tax basis in any shares of OKE common stock received in the transaction should equal the closing OKE share price on the transaction close date, September 25, 2023. The OKE closing share price on September 25, 2023, was $66.54.
A U.S. holder’s holding period for any shares of OKE common stock received in the transaction on September 25, 2023, begins on September 26, 2023.
5. WHAT ARE THE TAX IMPLICATIONS OF THE TRANSACTION FOR FOREIGN INVESTORS?
The receipt of shares of OKE common stock and cash in exchange for MMP units pursuant to the transaction will be treated as a taxable sale of MMP units for U.S. federal income tax purposes. For a foreign unitholder of MMP, the broker effecting the transfer on behalf of the foreign unitholder is responsible for withholding 10% of the amount realized (total proceeds) on the sale under Treasury Regulation Section 1.1446-4(f). The amount realized per unit on the sale includes 0.667shares of OKE common stock (valued at the closing price of OKE on the closing date of the transaction, which was $66.54) and $25 cash for a total consideration value of $69.38 per unit.
6. WHAT CONSIDERATION DID I RECEIVE FOR MY MMP UNITS?
Holders of MMP units received 0.667 shares of OKE common stock for each MMP unit, and, $25.00 in cash for each MMP unit, for a total consideration value of $69.38 per unit. No fractional shares of OKE common stock were issued. Instead, holders of MMP units received cash in lieu of fractional shares.
7. WILL OKE CONTINUE BEING A CORPORATION THAT GENERATES AN IRS FORM 1099?
Yes. OKE stockholders will receive an annual IRS Form 1099-DIV from their broker’s reflecting their dividend income.
These materials, as filed with the SEC, are available online at www.sec.gov and on ONEOK’s investor relations website at http://ir.oneok.com/
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS:
This communication contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included in this communication that address activities, events or developments that ONEOK expects, believes or anticipates will or may occur in the future are forward-looking statements. Words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “create,” “intend,” “could,” “would,” “may,” “plan,” “will,” “guidance,” “look,” “goal,” “future,” “build,” “focus,” “continue,” “strive,” “allow” or the negative of such terms or other variations thereof and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements include, but are not limited to, statements regarding the transaction between ONEOK and Magellan (the “transaction”). There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this communication. These include the risk that ONEOK’s and Magellan’s businesses will not be integrated successfully; the risk that cost savings, synergies and growth from the transaction may not be fully realized or may take longer to realize than expected; the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the transaction; the risk that changes in ONEOK’s capital structure and governance could have adverse effects on the market value of its securities; the ability of ONEOK and Magellan to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers and on ONEOK’s and Magellan’s operating results and business generally; the risk the transaction could distract management from ongoing business operations; the risk of pending or future litigation relating to the transaction; the risk that ONEOK may be unable to reduce expenses or access financing or liquidity; the impact of a pandemic, any related economic downturn and any related substantial decline in commodity prices; the risk of changes in governmental regulations or enforcement practices, especially with respect to environmental, health and safety matters; and other important factors that could cause actual results to differ materially from those projected. All such factors are difficult to predict and are beyond ONEOK’s control, including those detailed in ONEOK’s most recent Annual Report on Form 10-K and in the other filings that it makes with the Securities and Exchange Commission (SEC), which are available on the SEC's website at www.sec.gov. All forward-looking statements attributable to ONEOK or persons acting on its behalf are expressly qualified in their entirety by these factors. Any such forward-looking statement speaks only as of the date on which such statement is made, and, other than as required under securities laws, ONEOK undertakes no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.