Energy Transfer Buys Williams Cos. for $32B

The deal will create one of the world's largest energy infrastructure companies with a network of more than 100,000 miles of pipelines.
Katie Kuehner-HebertSeptember 28, 2015

After a months-long pursuit, pipeline giant Energy Transfer Equity will acquire Williams Cos. in a $32.6 billion deal that will create one of the world’s largest energy infrastructure companies.

Williams in June had rejected an unsolicited $48 billion offer from Energy Transfer as too low but the company’s worth has declined since then amid the continuing slide in oil prices.

According to The Wall Street Journal, Williams had hired advisers to run an auction that drew other bidders, but in the end, Energy Transfer prevailed Monday with a bid that values Williams shares at $43.50, a 4.6% premium to their closing price Friday.

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The stock fell more than 10% to $37.14 on Monday, while Energy Transfer shares were down 7.7% at $39.64.

“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.

The two companies will have a combined network of more than 100,000 miles of oil, natural gas, and liquid pipelines. Williams has significant fuel-moving capabilities in the northeastern U.S., while most of Energy Transfer’s pipelines are located across the south and Midwest.

Energy Transfer began pursuing Williams in January. Its offer was contingent on the termination of Williams’ pending acquisition of natural gas master limited partnership Williams Partners, in which Williams holds a 66% interest.

Williams Partners said on Monday it would terminate the deal and receive $428 million in a termination fee from Williams.

“I am excited that we have now agreed to the terms of this merger with Williams,” Energy Transfer’s Chairman Kelcy Warren said in a news release. “I believe that the combination of Williams and ETE will create substantial value for both companies’ stakeholders that would not be realized otherwise.”

Williams’ Chairman Frank T. MacInnis said that “after a comprehensive evaluation of strategic alternatives, including extensive discussions with numerous parties,” the company’s board had decided the latest merger bid was in the best interests of Williams’ stockholders.