Dallas, Texas-based natural gas pipeline operator Regency Energy Partners LP (NYSE:RGP) announced Thursday it will acquire its rival PVR Partners LP (NYSE:PVR) for a $5.6 billion. The sum also includes $1.8 billion in debt assumption, reports Tina Davis of Bloomberg. The deal will give Regency Energy Partners LP (NYSE:RGP) a strong presence in the Marcellus and Utica shale fields. The companies said in a joint statement that their boards have approved the merger agreement.

Regency Energy

Regency Energy pays 25.7 percent premium

Regency Energy Partners LP (NYSE:RGP) said that the combined company will be better positioned to capitalize on the North American unconventional energy boom. The combined company will be headquartered in Dallas, and its name will remain Regency Energy Partners LP (NYSE:RGP). The companies expect to close the deal in the third quarter of 2014.

The acquisition is a unit-for-unit transaction. PVR Partners LP (NYSE:PVR) unitholders will receive 1.02 units of Regency Energy Partners LP (NYSE:RGP) for each unit they own. They will also receive a one-time cash totaling about $40 million, the companies said.  The deal values PVR Partners LP (NYSE:PVR) at $28.68 per unit, a 25.7 percent premium to its closing price on Wednesday.

PVR to strengthen Regency Energy’s position in key areas

PVR Partners LP (NYSE:PVR) owns a number of natural gas processing plants and pipelines. It also owns and operates coal and other natural resource properties. Regency Energy Partners LP (NYSE:RGP) CEO Michael J. Bradley said the acquisition will improve his company’s scale in North Louisiana, South Texas, and West Texas.

Regency Energy Partners LP (NYSE:RGP), a master limited partnership, is engaged in the complete process, right from gathering and processing to transportation of natural gas. Earlier this year, the company acquired Southern Union Gathering Co. for $1.5 billion from Energy Transfer Partners LP (NYSE:ETP) to strengthen its presence in the Permian Basin.

While Regency Energy Partners LP (NYSE:RGP) shares dipped 4.17 percent to $26.67, PVR Partners LP (NYSE:PVR) shares surged 15.12 percent to $26.26 at 9:52 AM EDT. After today’s jump, PVR Partners LP (NYSE:PVR) shares are up 2.34 percent this year so far.