Crestwood Midstream Partners LP (NYSE: CMLP) and Crestwood Holdings LLC and Inergy, L.P. (NYSE:NRGY) and Inergy Midstream LP (NYSE:NRGM) announced Monday to create a fully integrated midstream partnership having a total enterprise value of approximately $7 billion.

Crestwood Inergy

Crestwood Midstream Partners LP (NYSE: CMLP) and Inergy, L.P. (NYSE:NRGY) Merger

Crestwood Midstream Partners LP (NYSE: CMLP) and Inergy, L.P. (NYSE:NRGY) will come together to create an assortment of different midstream assets, which will provide a multitude of services in the premier shale plays in North America including the Marcellus Shale, Eagle Ford Shale, Utica Shale, Barnett Shale, Fayetteville Shale, Granite Wash, Permian Basin, Bakken Shale, Haynesville Shale, Powder River Basin Niobrara Shale and Monterey Shale.

The increased scale of services along with the diversification brings the partnership to the level of competition for massive Greenfield development and acquisition opportunities throughout the midstream value chain. The partnership between the two firms will bring out a combination of vital portfolios of long term, fee based contracts with good customers. The accumulation of huge capital will be helpful in growth in the long term in the various geographies.

The definitive transaction agreements have been approved by the board of directors and independent committees of Crestwood Midstream Partners LP (NYSE: CMLP) and Inergy, L.P. (NYSE:NRGY). Under the agreement the Crestwood holding will acquire the general partner and thus control of Inergy L.P. Crestwood’s Chairman, President and Chief Executive Officer, Robert G. Phillips, will look over Inergy L.P. until completion of the merger and then will be serving as chairman, President and Chief Executive Officer of the combined company.

Details of the Complex Merger

In the first transaction, Crestwood holdings will acquire the General Partners of Inergy, L.P. (NYSE:NRGY) for $80 million in cash. The transaction will be concluded in mid June. Before the transaction, the 56.4 million common units of Inergy L.P. will be distributed to the unit holders, which are held in Inergy Midstream.

In the second transaction, Crestwood holdings will give 100 percent of its interest in Crestwood Gas Services GO LLC, which is the general partner of Crestwood Midstream Partners LP (NYSE: CMLP), to Inergy.

The option of Crestwood Holdings will include Crestwood holding contributing to Inergy, L.P. (NYSE:NRGY) L.P 7.1 million of the Inergy Midstream LP (NYSE:NRGM) common units, which it will receive in the merger in exchange for 14.3 million common units of Inergy L.P.

The final transaction will get over in the third quarter of 2013. In this transaction, Crestwood midstream will be merged into the subsidiary of Inergy Midstream LP (NYSE:NRGM). As per the merger, the 1.070 units of Inergy Midstream for each unit of Crestwood Midstream Partners LP (NYSE: CMLP) will be given to Crestwood Midstream unit holders.

In addition to that, all those who hold the unit of Crestwood Midstream Partners LP (NYSE: CMLP) will get a one-time cash payment at closing of around $35 million total, or $1.03 per unit. The Inergy Midstream LP (NYSE:NRGM) will pay $25 million out of this and approximately $10 million by Crestwood Holdings.