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Energy Transfer Equity To Acquire Williams Cos. In $37.7 Bln Deal

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Energy infrastructure company Energy Transfer Equity, L.P. (ETE) agreed Monday to acquire peer Williams Companies, Inc. (WMB) in a deal valued at about $37.7 billion, including the assumption of debt and other liabilities. The deal will create the third largest energy franchise in North America and one of the five largest global energy companies. The deal will be immediately accretive to cash flow and distributions for both ETE and WMB.

The move follows the termination of the previously agreed merger agreement between Williams Companies and Williams Partners L.P. (WPZ) earlier in the day.

As part of the current deal, WPZ will retain its current name and remain a publicly traded partnership headquartered with a meaningful ongoing presence in Tulsa, Oklahoma. Also as a result of this announcement, WMB and WPZ are withdrawing their financial guidance.

Under the terms of the deal, Energy Transfer Corp. LP or ETC, an affiliate of ETE, will acquire Williams at an implied current price of $43.50 per Williams share. Williams' stockholders will have the right to elect to receive as merger consideration either ETC common shares and / or cash, subject to proration if either is oversubscribed.

WMB stockholders will also be entitled to a special one-time dividend of $0.10 per WMB share to be paid immediately prior to the closing of the transaction. The special one-time dividend is in addition to the regularly scheduled WMB dividends to be paid before closing.

The deal, approved by the Boards of Directors of both entities, is expected to close in the first half of 2016. The closing of the deal is primarily subject to customary conditions, including the receipt of approval of the merger from Williams' stockholders and all required regulatory approvals. There is no requirement for an ETE unit holder vote.

ETE anticipates EBITDA from commercial synergies to exceed $2 billion per year by 2020, which will require overall incremental capital investment of more than $5 billion to achieve. Further, up to $400 million of additional cost savings is expected from the implementation of ETE's shared service model.

Energy Transfer Equity had in June confirmed it made an unsolicited offer to merge with Williams Cos. in an all-equity transaction valued at $53.1 billion, including the assumption of debt and other liabilities. However, the offer was then spurned by Williams Cos., saying the offer significantly undervalued the company.

"I am excited that we have now agreed to the terms of this merger with Williams. I believe that the combination of Williams and ETE will create substantial value for both companies' stakeholders that would not be realized otherwise," ETE's Chairman Kelcy Warren stated now.

In Monday's regular trading session, ETE is currently trading at $21.32, down $1.92 or 8.26% on a volume of 1.65 million shares, and WMB is trading at $39.12, down $2.48 or 5.96% on a volume of 0.63 million shares.

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