My guess is WMB is trading at below what it will trade after they make a div adjustment, even if it is material. The comparable is KMI, yielding 2.7% after a 75% div cut, WMB would trade at $24.
Your account should show the election you made if you put the cursor over where the symbol should be, says something like no number. If you want to trade, you have to remove the election. If you notice the price doesn't change intra day.
The dividend shouldn't be a factor in voting, it's going to zero with ETE and could be material but maybe not with WMB. Even with a 2x exchange, the div would be $2.28 and it's 2.56 so even with ETE continuing to pay the same dist, the WMB will be less anyway you cut it.
There is no break fee for owners rejecting the deal, only the $50 mm in cash costs to ETE. That article is wrong.
There is no penalty for owners rejecting the deal, only a $50 mm payment. The deal as structured is not good for either entity. So what's you calculation of dilution per unit with all equity.
The lead in last q report. The CHK min vol contracts are a big issue, $300 mm in ebitda. Half of WMB's business is gathering and processing and it is influenced by oil and gas prices. Why do you think are talking cutting the div. Comm prices are the reason for this deal mess. Oil was a $100 when this started.
“To help offset the effects of low commodity prices and slower near-term growth among producers, we cont
inue to aggressively manage our costs and we made additional cost cutting decisions at the end of the first quarter, including reducing our workforce by 10 percent.
The gathering and processing ebitda from Chesapeake is $300mm annually, the drilling activity and volumes are dependent on oil and gas prices. Most of the wells the Marcellus, Utica are liquids rich and the returns are dependent on the price of oil. Most of the oil wells in the top tier core shales are 30% plus gas so volumes are definitely impacted. It is significant to WMB.
Just like everything else related to this deal. WMB holder will get less div, assuming you reinvested the cash, and no tax bite, 2x units, $2.28 per WMB share vs $2.56 now, so even if ETE keeps dist the same, WMB div is cut. I'm guessing that the short fall in the div might be 10% currently, $2.30 vs $2.56. The headline that WMB will be cut works even if ETE doesn't cut, WMB cuts to cash flow or deal goes through and div is eliminated for two years. As someone said, just because div is cut doesn't mean the value is the div doesn't accrue to the stock price. But you are right, why would you say it now. It's a strategy, just hope it's the right one. The stock price didn't move much today, as I mentioned before, cut it to 64 cents annual, 2.7% yield, same as KMI and you get a $24 stock. Not sure WMB isn't at a low no matter what happens. Still voted no and hope it dies. I'm pulling for Warren to refuse to close or settle before it goes to court.
My message didn't print, KMI comparison, WMB cuts div 75% and stock value is $24, 64 cent div at 2.7% yield, which is KMI's currently. WMB is undervalued no matter where this ends up. If you didn't have the Warren factor, a combination with all equity would look like a good result. Great asset mix. But you do have Warren.
Good point. Why would you say anything about the next dividend now? And saying it could be material or not. That's not the way you present a div cut.
Suspect this was focused on damages from ETE for killing the WPZ deal. Not the way you announce a div cut, could be material. Material in SEC terms is more than 5%. I think the WMB board has been out maneuvered so far. The combination of assets would be the best in the sector, bar none.
pj, that's not the way you announce a div cut, will be reduced, maybe materially. This is truly the deal from hell. There is the scenario that this thing closes with all equity, no dist cut at ETE and the combined co turns into the franchise leader in the sector. Problem for me is Warren. I remember back well over a decade when I doubled my investment in KMI, analysts were saying the MLP form was a sham, so I sold, regretted it and bought back into EPD instead and it was the best thing that happened, EPD has been a much better bet longer term than KMI so sometimes you win despite all of your rational analysis. I don't see how the vote is no on the deal with this announcement. All equity 2x would get $30 with $15 ETE. ETE could go to $18 plus with oil coming back, Brent at $52 today, gas above $3 for next year. Those are better nos than when the deal was finalized in Sept. Will be interesting to see how the stocks trade today.