Williams Cos. CEO Alan Armstrong said in a statement that the combined company would be better positioned to grapple with low energy prices. It connects the Marcellus to populous USA markets.
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JPMorgan Chase & Co. boosted their target price on Energy Transfer Partners from $72.00 to $73.00 and gave the stock an “overweight” rating in a research report on Tuesday, June 16th.
Energy Transfer Partners (NYSE:ETP) last posted its earnings results on Wednesday, August 5th. Williams stockholders electing to receive stock consideration will receive a fixed exchange ratio of 1.8716 ETC common shares for each share of WMB common stock, before giving effect to proration.
Williams chairman Frank MacInnis said in a statement that after evaluating strategic alternatives, including extensive discussions with “numerous” parties, the board concluded that a merger with Energy Transfer Equity was in the best interests of Williams’ stockholders and all of its other stakeholders.
Energy Transfer’s willingness to proceed with the proposed acquisition was contingent on the termination of the Williams Cos./Williams Partners transaction.
The transaction ranks among the largest in the North American pipeline industry, which a year ago saw Kinder Morgan Inc. consolidate its partnership assets into one company through transactions with an enterprise value of more than $40 billion, according to data compiled by Bloomberg.
With more than 70,000 miles of pipeline, Energy Transfer already controls a large block of the energy supply from Texas to the Midwest and Northeast. Prices have also fallen for fuels like ethane and propane, which has hurt companies like Williams, which processes natural gas. ETE is paying about $43.50 a share for Williams. Fractionation and additional processing facilities are under construction, with plans to add NGL pipelines. Institutional Investors own 50.4% of Company shares. Chevron is the joint venture partner and owns the remaining 49%.
Williams, with more than 30,000 miles of pipeline, offers Energy Transfer the chance to expand its business moving natural gas around the country, along with the opportunity to move into the Western United States and Canada, where oil sands have become a large new source of crude.
“Some shareholders may be disappointed as the implied value (of the deal) is identical to what was rejected just three months earlier and were perhaps expecting a marginal uplift in implied deal terms”, Jefferies analysts wrote in a note. Planning for the integration of the companies is to begin after antitrust clearance, the companies said.
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