Tax Considerations for Magellan Unitholders

“In the final analysis, this transaction has, when viewed as an integrated whole, a remarkably favorable tax profile. When a valid comparison is made of the tax benefits of the transaction to the relatively modest tax cost the deal engenders, it is abundantly clear that such benefits greatly outweigh such costs.”

“… this transaction does not create tax liabilities for MMP’s unitholders. Those liabilities were always present. Instead, this transaction simply accelerates their payment; and [ONEOK] has provided the unitholders with the means, through the Cash Consideration… to meet those obligations.”

“The Cash Consideration manifests an unusual sensitivity and solicitude, on [ONEOK]'s part, to the tax consequences of the transaction to [Magellan]'s unit holders by providing them with the liquidity they will need to defray their tax liabilities.”

“As is typically the case, acquirers whose acquisitions are structured to achieve a basis step up, share that largesse with the owners of the acquired entity in the form of an increased purchase price for the acquired entity. In fact, here, an unquantifiable, but undoubtedly substantial, portion of the "premium" [ONEOK] is offering in the transaction is directly attributable to the tax savings [ONEOK] will reap from the basis step up…it would become readily apparent that the benefits of the ‘step up’ substantially outweigh the true ‘cost’ borne by the unit holders from accelerating a tax liability that would, inevitably, have to be shouldered.”