Targa to acquire Stakeholder Midstream for $1.25 billion

HOUSTON - Targa Resources Corp. (NYSE:TRGP) announced Monday it has entered into a definitive agreement to acquire Stakeholder Midstream, LLC for $1.25 billion in cash, expanding its Permian Basin operations. The midstream company, currently trading near $175 per share with a market cap of $37.6 billion, has demonstrated strong financial performance with a 12.4% price return over the past six months according to InvestingPro data.

The acquisition includes approximately 480 miles of natural gas pipelines, 180 million cubic feet per day of cryogenic natural gas processing and sour treating capacity, carbon capture activities generating 45Q tax credits, and a crude oil gathering system.

Stakeholder’s assets are supported by long-term, fee-based contracts across approximately 170,000 dedicated acres with activity that has shown very low decline rates, according to the company’s press release.

Targa expects Stakeholder to generate unlevered adjusted free cash flow of approximately $200 million annually with minimal capital requirements. The purchase price represents about six times the estimated 2026 unlevered adjusted free cash flow.

"This acquisition is a nice bolt-on asset that has meaningful free cash flow supported by a stable to modestly growing volume profile with minimal capital needs and executed at an attractive valuation," said Matt Meloy, Chief Executive Officer of Targa.

The transaction, subject to customary closing conditions and regulatory approvals, is expected to close in the first quarter of 2026. Targa plans to fund the acquisition using cash on hand and its existing $3.5 billion revolving credit facility.

The company stated the acquisition would have limited impact on its leverage ratio, which is expected to remain within its long-term target range of 3.0 to 4.0 times.

RBC Capital Markets is serving as Targa’s financial advisor, while Jefferies is acting as the exclusive financial advisor to Stakeholder for the transaction. Analysts remain bullish on Targa’s prospects, with a consensus "Strong Buy" recommendation and price targets ranging from $188 to $261 per share. The company has maintained dividend payments for 15 consecutive years and raised its dividend for 4 consecutive years - just two of the many insights available in Targa’s comprehensive Pro Research Report, available to subscribers on InvestingPro.

In other recent news, Targa Resources reported its third-quarter 2025 earnings, exceeding analysts’ expectations with an earnings per share (EPS) of $2.13, compared to the forecasted $2.11. Despite missing revenue projections, the company’s performance has been viewed positively by investors. RBC Capital has responded by raising its price target for Targa Resources to $213 from $208, while maintaining an Outperform rating. The firm noted that Targa’s strong performance positions it at the high end of its 2025 Adjusted EBITDA guidance, which RBC suggests may still be conservative.

Additionally, Targa Resources announced the pricing of a $1.75 billion public offering of senior notes. This offering includes $750 million of 4.350% Senior Notes due 2029 and $1.0 billion of 5.400% Senior Notes due 2036. The notes were priced at nearly their face value, with the offering expected to close on November 12, 2025, pending customary closing conditions. These developments reflect Targa Resources’ strategic financial maneuvers and investor confidence in its future growth.

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