SHLX Shell Midstream Partners LP

Item 1.01 Entry into a Material Definitive Agreement.

On July 25, 2022, Shell USA, Inc., a Delaware corporation (“Parent”), Shell Midstream LP Holdings LLC, a Delaware limited liability company and indirect wholly owned subsidiary of Parent (“Holdings”), Semisonic Enterprises LLC, a Delaware limited liability company and indirect wholly owned subsidiary of Parent (“Merger Sub”), Shell Midstream Partners, L.P., a Delaware limited partnership (the “Partnership”), and Shell Midstream Partners GP LLC, a Delaware limited liability company and the general partner of the Partnership (the “General Partner”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into the Partnership (the “Merger”), with the Partnership surviving and continuing to exist as a Delaware limited partnership.

At the effective time of the Merger (the “Effective Time”), each common unit issued and outstanding representing limited partner interests in the Partnership (“Common Units”) other than Common Units owned immediately prior to the Effective Time by Parent and its affiliates, including Holdings (“Public Common Units”), will be converted into the right to receive $15.85 per Public Common Unit in cash, without any interest thereon (“Merger Consideration”). In connection with the Merger, (i) the General Partner’s non-economic general partner interest in the Partnership and (ii) the Common Units owned by Parent and its affiliates, including Holdings, and the Series A perpetual convertible preferred units (“Preferred Units”) shall not be cancelled, shall not be converted into or entitle the holder thereof to receive the Merger Consideration and shall remain outstanding following the Merger as a non-economic general partner interest in the Partnership, Common Units and Preferred Units, respectively.

The Conflicts Committee (the “Conflicts Committee”) of the board of directors of the General Partner (the “GP Board”) has (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Partnership, including the holders of the Public Common Units (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger (the foregoing constituting “Special Approval” as defined in the Second Amended and Restated Agreement of Limited Partnership of the Partnership dated April 1, 2020 (the “Partnership Agreement”)), (iii) recommended that the GP Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, and (iv) recommended that the GP Board direct that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the limited partners of the Partnership (the “Limited Partners”) pursuant to Section 14.3 of the Partnership Agreement and authorize the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement.

The GP Board has (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair and reasonable to the holders of the Public Common Units and are in the best interests of the Partnership, including the holders of the Public Common Units, (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, (iii) approved the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby, including the Merger, and (iv) directed that the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted to a vote of the Limited Partners for approval pursuant to Section 14.3 of the Partnership Agreement, recommended approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, by the Limited Partners and authorized the Limited Partners to act by written consent pursuant to Section 13.11 of the Partnership Agreement.

The Merger Agreement contains customary representations and warranties from the parties, and each party has agreed to customary covenants applicable to such party, including, among others, covenants relating to (i) the Partnership’s and the General Partner’s conduct of business during the interim period between the execution of the Merger Agreement and the Effective Time and (ii) the obligation to use reasonable best efforts to cause the Merger to be consummated.

Completion of the Merger is subject to certain customary conditions, including, among others: (i) the written consent of Holdings as the holder of a majority of the voting power of the outstanding limited partner interests in the Partnership delivered concurrently with the execution and delivery of the Merger Agreement approving the Merger Agreement and the transactions contemplated thereby, including the Merger (“Written Consent”), not having been amended, modified, withdrawn, terminated or revoked; (ii) there being no law or injunction prohibiting consummation of the transactions contemplated under the Merger Agreement; (iii) the mailing of an information statement to be filed by the Partnership with the United States Securities and Exchange Commission (“SEC”) on Schedule 14C at least 20 days prior to the closing of the transaction; (iv) subject to specified materiality standards, the accuracy of certain representations and warranties of each party; and (v) compliance by each party in all material respects with its covenants.

The Merger Agreement provides for certain termination rights for both Parent and the Partnership, including in the event that (i) the parties agree by mutual written consent (with the prior written approval of the Conflicts Committee) to terminate the Merger Agreement, (ii) the Merger is not consummated by January 25, 2023, (iii) a law or injunction prohibiting the consummation of the transactions contemplated by the Merger Agreement is in effect and has become final and non-appealable, or (iv) the other party is in material breach of the Merger Agreement. The Merger Agreement provides that, upon termination of the Merger Agreement under certain circumstances, (i) the Partnership will be obligated to reimburse Parent for its out-of-pocket fees and expenses and (ii) Parent will be obligated to reimburse the Partnership for its out-of-pocket fees and expenses, in each case, in an amount not to exceed $5 million.

The foregoing description of the Merger Agreement and the Merger does not purport to be complete and is qualified in its entirety by the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K.

The foregoing summary of the Merger Agreement has been included to provide investors and securityholders with information regarding the terms of the Merger Agreement and is qualified in its entirety by the terms and conditions of the Merger Agreement. It is not intended to provide any other factual information about Parent, the Partnership or their respective subsidiaries and affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of such agreement and as of specified dates, were solely for the benefit of the respective parties to such agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the respective parties to such agreement instead of establishing these matters as facts, and may be subject to standards of materiality that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Parent, the Partnership or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Partnership’s public disclosures.

The information set forth in Item 5.07 of this Current Report on Form 8-K is incorporated herein by reference into this Item 1.01.

Important Information About the Proposed Merger

In connection with the proposed Merger, the Partnership will prepare an information statement to be filed with the SEC that will provide additional important information concerning the proposed Merger. When completed, a definitive information statement will be mailed to the Partnership’s unitholders. THE PARTNERSHIP’S UNITHOLDERS ARE STRONGLY ADVISED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PARTNERSHIP’S INFORMATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The Partnership’s unitholders will be able to obtain, without charge, a copy of the information statement (when available) and other relevant documents filed with the SEC from the SEC’s website at www.sec.gov. The Partnership’s unitholders will also be able to obtain, without charge, a copy of the information statement and other documents relating to the proposed Merger (when available) at www.shellmidstreampartners.com.