Pipeline partnership Targa Resources Partners LP said it agreed to buy the natural gas liquids business of parent company Targa Resources Inc for $530 million in cash and stock.

The partnership will pay a quarter of the transaction value in newly issued common and general partner units. The remaining $397.5 million will be cash, paid by borrowing on its credit facility.

Targa Resources Partners is a master limited partnership (MLP), which means it pays no corporate taxes and distributes nearly all of its profits to investors and its general partner.

The partnership said the deal will add fee-based cash flow, helping it to keep up with its distributions.

Targa said it has also agreed to provide distribution support to the partnership by reducing its general and administrative expenses up to $8 million a quarter, beginning in the fourth quarter of 2009 and running through 2011.

Targa was formed by private equity company Warburg Pincus and management in 2003 to pursue gas gathering, processing and pipeline asset acquisition opportunities.

(Reporting by Michael Erman; Editing by Tim Dobbyn)