Acquisitions and Divestitures

Acquisition of Terminal Assets from and Joint Venture With BP Products North America Inc. (BP)

On February 1, 2016, we completed the acquisition of 15 products terminals and associated infrastructure from BP for $349 million, including a transaction deposit paid in 2015 and working capital adjustments paid in 2016. In conjunction with this transaction, we and BP formed a joint venture, with an equity ownership interest of 75% and 25%, respectively. Subsequent to the acquisition, we contributed 14 of the acquired terminals to the joint venture, which we operate, and the remaining terminal is solely owned by us. BP acquired its 25% interest in the joint venture for $84 million, which we reported as “Contributions from noncontrolling interests” within our accompanying consolidated statement of cash flows for the six months ended June 30, 2016. Of the acquired assets, 10 terminals are included in our Terminals business segment and 5 terminals are included in our Products Pipelines business segment based on synergies with each segment’s respective existing operations.

Allocation of Purchase Price

The evaluation of the assigned fair values for the BP terminals acquisition is ongoing and subject to adjustment. As of June 30, 2016, our preliminary allocation of the purchase price for the BP terminals acquisition and the adjusted purchase price allocations for the Hiland acquisition and Royal Vopak terminals acquisition, both completed in February 2015, are detailed below (in millions).



	Acquisitions
	BP Terminal Assets			Hiland			Royal Vopak Terminal Assets
Purchase Price Allocation:
Current assets	$	2		$	79		$	2
Property, plant and equipment	396			1,492			155
Goodwill	—			310			6
Deferred charges and other assets(a)	—			1,498			—
Total assets acquired	398			3,379			163
Current liabilities	—			(253		)	(1		)
Debt	—			(1,413		)	—
Other liabilities	(49		)	(4		)	(4		)
Cash consideration	$	349		$	1,709		$	158

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(a)	Primarily consists of customer contracts and relationships with a weighted average amortization period of 16.4 years.

After measuring all of the identifiable tangible and intangible assets acquired and liabilities assumed at fair value on the acquisition date, goodwill is an intangible asset representing the future economic benefits expected to be derived from an acquisition that are not assigned to other identifiable, separately recognizable assets. We believe the primary items that generated our goodwill are both the value of the synergies created between the acquired assets and our pre-existing assets, and our expected ability to grow the business we acquired by leveraging our pre-existing business experience. We apply a look through method of recording deferred income taxes on the outside book-tax basis differences in our investments. As a result, no deferred income taxes are recorded associated with non-deductible goodwill recorded at the investee level.

Subsequent Event—Sale of Equity Interest in SNG

On July 10, 2016, we announced the anticipated sale of a 50% interest in our SNG natural gas pipeline system to The Southern Company (Southern Company) for an expected $1.47 billion and the formation of a joint venture, which will include our remaining 50% interest in SNG, which we will operate. Inclusive of existing SNG debt, the transaction equates to an SNG total enterprise value of $4.15 billion. Subject to customary closing conditions and regulatory approvals, the transaction is expected to close in the third or early fourth quarter of 2016, at which time, any difference between the sales price and the proportionate carrying value of the interests in SNG being sold would be recognized.