Richard Kinder, Chairman and Chief Executive Officer of Kinder Morgan Energy Partners LP, addresses the Reuters Energy Summit in Houston
Richard D. Kinder, Chairman and Chief Executive Officer of Kinder Morgan EnergyPhoto: Richard Carson—Reuters

For much of the past year, Rich Kinder, the chairman and chief executive of pipeline giant Kinder Morgan Inc., KMI pushed back hard against an investment community that had soured on the growth prospects at the master limited partnerships his company controlled. And all the while, he put his money where his mouth was, continuing to acquire shares even as the price dropped.That’s why I’ve never sold a share, and I just keep on stupidly buying more,” he told Fortune in an interview this year.

Kinder didn’t get to be America’s MLP king just by being stubborn. He’s a dealmaker at heart, and he announced a bombshell on Sunday, saying he wants to fold in his two MLPs (Kinder Morgan Energy Partners and El Paso Pipeline Partners) and a related management company into Kinder Morgan Inc. in a stock and cash deal worth $44 billion.

He owns roughly a quarter of KMI’s stock, and the market bump since the announcement gave him a $700 million bounce. Not bad. When the deal closes, his stake will drop to about 11 percent.

MLPs pass their profits directly to unitholders and to their general partners. Due to their past success, the Kinder Morgan MLPs were paying so much of their cash flow to the general partner that it had driven up the cost of capital and made it more difficult to find deals that met its profit goals. “We couldn’t make the hurdle rate,” Kinder said. He insists that the MLP model works, just maybe not as well for mature companies where size becomes your own enemy in achieving the growth rates investors demand.

Shares in many MLPs were up sharply in trading on Monday, as investors began speculating on whether other mature mid-stream companies might pursue a similar route as Kinder chose.

If the deal is approved by shareholders, unitholders and regulators, all the assets will be under Kinder Morgan Inc.

Kinder said the company will be growth and acquisition-oriented, able to look at a wider range of deals that are being fueled by the infrastructure needs of the North American energy boom. He expects consolidation during the next few years. “It’s a fertile field to do a little grazing in,” he said.