Suburban Propane acquiring Inergy retail unit

Inergy LP has agreed to sell its retail propane operations to Suburban Propane Partners LP for about $1.8 billion. The transaction is expected to close in the fourth quarter of 2012.

Under the terms of the agreement, Inergy will receive $600 million in Suburban Propane common units. Suburban Propane will offer to exchange Inergy’s outstanding senior notes for up to $1 billion of new Suburban Propane senior notes and $200 million in cash. Additionally, Inergy has agreed to distribute about 13.7 million of the Suburban Propane Partners common units it receives to Inergy unitholders.

Inergy had roots in the retail propane business. Now, it will focus on midstream growth.

Inergy and Suburban Propane, however, are not the first Top 50 Propane Retailers to strike a deal of this magnitude in the last few months. Earlier this year, AmeriGas Propane completed a deal to acquire the operations of Heritage Propane.

AmeriGas (No. 1), Heritage (No. 3), Inergy (No. 4) and Suburban Propane (No. 5) all ranked in the top five on LP Gas Magazine’s most recent Top 50 Propane Retailers list published in February 2012.