This 4.5%-Yielding Pipeline Stock Just Made a $4.4 Billion Acquisition. Here's What It Means for the Dividend.

ONEOK Inc. agreed to buy Brazos Midstream's Permian Basin assets for $4.425 billion, funded by a $9 billion equity investment from Apollo. The deal doubles ONEOK's processing capacity in the region, with 600,000 acres under long-term contracts. ONEOK aims to accelerate EBITDA growth and deleverage to 3.25x debt-to-EBITDA, with plans to settle $5 billion in debt.

Apollo Global Management (APO) shares fell 4.4% after Brightspeed, a broadband provider backed by Apollo-managed funds, reported a 8.7% revenue decline and raised concerns about its financial stability. Apollo is exploring financing options to address debt. Separately, Apollo announced converting its $9B stake in Oneok to fund an acquisition and agreed to sell Kelvion for $3.4B. The S&P 500, Dow, and Nasdaq also declined, contributing to the sell-off.

Apollo Global Management (NYSE:APO) shares dropped 3.5% after Brightspeed, an Apollo portfolio company, reported a 8.7% revenue decline to $386M in Q2 and expressed doubt about its ability to continue operations. Brightspeed is seeking financing to meet debt obligations, with a net loss of $879M for the first half of 2024.

Apollo Global Management plans to convert its $9 billion stake in Oneok Inc. into investment-grade debt for sale. The deal, announced Sunday, allows Oneok to raise capital without adding conventional debt or affecting its credit rating. Apollo aims to structure the securities so they can receive investment-grade ratings, with some placed with Athene and third-party insurers. This strategy has been used in over $100 billion of transactions, including deals with Intel and BP.

ONEOK (OKE) is acquiring Brazos Midstream’s Permian assets for $4.43B in cash, with a $9B equity investment from Apollo. The deal is expected to double its processing capacity and be immediately accretive to earnings and free cash flow per share. ONEOK plans to use $5B from Apollo to reduce debt, aiming for 3.25x debt-to-EBITDA by 2027. The acquisition includes 700 miles of gathering infrastructure and 1.2 Bcf/d of processing capacity, with long-term contracts backing 600,000 dedicated acres.

ONEOK received a $9 billion investment from Apollo's affiliate, AP Falcon Holdings, for Class B units. The funds will support the Brazos Midland acquisition and repay $5 billion in senior debt. The agreement includes governance terms and buyout rights, effective from September 10, 2026.