Share

Williams rejects ETE bid, considers possible sale of company

Williams said ETE’s bid significantly undervalues the business, but that it was exploring other strategic options. Furthermore, it might have a tough time finding a better offer, as not only is the premium very generous, but the price tag north of $50 billion leaves few available buyers.

Advertisement

Energy Transfer, chaired by billionaire Kelcy Warren, said on Sunday it made a stock-for-stock bid for Williams valued at $53.1 billion when including debt.

Energy Transfer said in its announcement that it was “disappointed that, despite the best of intentions and its efforts to reach a friendly, negotiated combination, it is forced into a position to publicly confirm its offer”, but that it “intends to engage with Williams to the extent that Williams undertakes a fair and even-handed process”.

That review may yield “a merger, a sale of Williams or continuing to pursue the Company’s existing operating and growth plan”, Williams said.

If the buyout goes through, it would be the biggest pipeline deal since Kinder Morgan (NYSE:KMI) consolidated its assets a year ago.

Shares in Energy Transfer Equity fell by $2.42 or 3.5 percent to $65.97 in early trading Monday. Energy Transfer will still hold a number of MLPs as part of its proposed deal.

The company said that the offer from the unnamed party was contingent on termination of Williams’ pending acquisition of Williams Partners.

The transaction could offer Dallas-based Energy Transfer a significant boost in the major natural gas Marcellus and Utica shale plays, where Williams has a solid base and plans for growth, said Mark Reichman, an analyst at energy investment bank Simmons & Co.

More than a decade ago, Williams sold off its 54.6% stake in another MLP called Williams Energy Partners L.P. That company later changed its name to Magellan Midstream Partners, which is planning to build a pipeline and distribution system that will bring some 75,000 barrels of refined petroleum products from Fort Smith into the small Rock market.

The deal would give ETE access to Williams’ assets in the northeast. The consolidation would allow Williams Cos.to increase dividends, lower borrowing costs and steer more cash into expansion projects. The transaction was executed at $$48.00 per share with total amount equaling $19,200,000. Analysts at Jefferies Group raised their price target on shares of Williams Partners L.P.to $66.00 and gave the company a “buy” rating in a research note on Thursday.

Advertisement

 

 

Williams rejects ETE bid, considers possible sale of company