May 21, 2018 - 7:40 AM EDT
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Wired News – The Williams Cos. Acquires All Outstanding Units of Williams Partners L.P.

LONDON, UK / ACCESSWIRE / May 21, 2018 / If you want access to our free research report on The Williams Cos., Inc. (NYSE: WMB) ("WMB"), all you need to do is sign up now by clicking the following link as the Company's latest news hit the wire. On May 17, 2018, the Company announced its plans to acquire all outstanding units of Williams Partners L.P. (NYSE: WPZ) ("WPZ"). The all-stock transaction is valued approximately at $10.5 billion. WMB already owns approximately 74% of WPZ and the current transaction will allow WMB to own 100% of WPZ. Register today and get access to over 1,000 Free Research Reports by joining our site below: is focused on giving you timely information and the inside line on companies that matter to you. This morning, The Williams and Williams Partners most recent news is on our radar and our team decided to put out a fantastic report on the company that is now available for free below:

Commenting on the transaction, Alan Armstrong, President and CEO at WMB, said:

"This strategic transaction will provide immediate benefits to Williams Cos.' and Williams Partners' investors. Today's announcement will maintain the income tax allowance that is included in our regulated pipeline's cost-of-service rates. This transaction also simplifies our corporate structure, streamlines governance and maintains investment-grade credit ratings."

Terms of the acquisition

As per terms of the acquisition, WMB will acquire 256 million outstanding units of WPZ. WMB has offered 1.494 WMB shares for each unit of Williams Partners under fixed exchange ratio. This could increase to 1.513 WMB's shares for each unit of WPZ if the deal does not close before the record date for payment of WMB's dividend for Q3 2018.

Accordingly, WMB plans to issue approximately 382.5 million new shares under that assumption that 1.494 is the final exchange offer. The new shares represent approximately 31.6% stake in the merged entity. The deal is expected to be taxable for WPZ's unit-holders, while WMB is expected to get tax benefits from the basis step-up.

The deal has been approved by the Board of Directors of WMB and WPZ after the Conflicts Committee of WPZ approved the transaction.

The transaction is expected to close in fall of 2018 subject to receipt of regulatory and shareholders' approval and other closing conditions. Once the deal is completed, WPZ will become the wholly owned subsidiary of WMB. WMB is confident of maintaining investment grade ratings even after the close of the acquisition.

Benefits of the Acquisition

The deal is expected to be immediately accretive to the EPS for WMB's shareholders. As the deal is an all-stock deal, the Company retains a significant amount of cash flow which it plans to reinvest in strategic acquisitions. The deal allows WMB to make significant savings in tax as the Company is not expected to be a taxpayer till end of 2024. The main highlight of the acquisition is that the deal simplifies the organization structure and makes it a value proposition for investors.

On the other hand, the current offer is at a premium of 6.4% of WPZ's closing price on May 16, 2018, before the deal was announced. WPZ's unitholders can get five dividends/distributions in calendar year 2018 which translates to approximately a 15% increase to the previously shared guidance for FY18. WPZ retains income tax allowance for regulated cost-of-service revenue. The deal increases cash holdings which can be invested in attractive capital projects. The deal also allows WPZ's unitholders to increase their equity holdings which translates to increased trading liquidity, float and access to capital markets.


The Federal Energy Regulatory Commission's (FERC) in March 2018 has revised its 2005 income tax policy. The revision allowed master limited partnership (MLP) interstate oil and natural gas pipelines to recover an income tax allowance in cost of service rates. WPZ owns and operates more than 33,000 miles of pipelines system wide including Transcontinental Gas Pipe Line Company (Transco), Northwest Pipeline, and a 50% interest in Gulfstream Natural Gas System. These regulated pipelines contributed to approximately one-third of WPZ's gross margin for FY17. Since FERC's revised policy will only impact cost of service rate calculations on a prospective basis. WPZ's Transco and Gulfstream Natural Gas System will not be impacted by this revision.

The revised FERC policy is expected to impact only a marginal percentage of WMB's revenues. However, the Company had announced in March 2018 that it is open to making changes in its organization structure to take maximum advantage of FERC's revised income tax policy. The changes in the organization structure would allow WMB to restore the income tax allowance as per the pipeline's cost of service rates.

The current acquisition is a result of WMB's deliberations on FERC's revised policy.

About Williams Companies, Inc. and Williams Partners L.P.

Founded in 1908, Tulsa, Oklahoma-based WMB is an energy infrastructure Company which holds approximately 74% stake in WPZ. WMB, including its assets held through WPZ is a premier provider of large-scale infrastructure connecting US natural gas and natural gas products to its customers.

WMB's interstate gas pipeline and gathering & processing operations is spread across US, including strategic assets in the deepwater Gulf of Mexico, the Rockies, the Pacific Northwest, and the Eastern Seaboard. WMB also owns and operates midstream gathering and processing assets, and interstate natural gas pipelines.

Stock Performance Snapshot

May 18, 2018 - At Friday's closing bell, The Williams' stock marginally dropped 0.75%, ending the trading session at $27.80.

Volume traded for the day: 12.58 million shares, which was above the 3-month average volume of 8.32 million shares.

Stock performance in the last month – up 8.81%; and past six-month period – up 1.09%

After last Friday's close, The Williams' market cap was at $23.18 billion.

Price to Earnings (P/E) ratio was at 1112.00.

The stock has a dividend yield of 4.89%.

The stock is part of the Basic Materials sector, categorized under the Oil & Gas Pipelines industry.


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Source: ACCESSWIRE Investor Awareness (May 21, 2018 - 7:40 AM EDT)

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