Credit Suisse is restricted from commenting on the deal so they didn't say anything about it, try again. There comments were on the sector. Look at EPD, raised distr 5% y/y, 140% coverage, 6%+ yield, IDRs embedded, the Duncan family owns a third of co, reinvesting distributions, no need to sell new equity for growth. Merrill target is $41, 60% upside. EPD is probably second best MLP in the sector. ETE $40 end of next year. The whole sector is beaten down, this is not about WMB deal. The sell off was/is a great opp.
Then sell and redeploy you funds. Don't understand your comments on ETC, those shares will own 52% of combined assets of ETE and WMB, the ETE units will own 48% of the assets. So they can't sell off anything. They want to expand the ETC shares but offering to trade ETC shares for ETE units. And they will probably use the ETC shares to buy other things. Dividend risk is not any greater than the separate cos would have had. The ETC shares value is protected for two years from shortfall, they actually think the ETC shares will trade at a premium to the ETE units, large inst investors can buy them, you can put them in a tax deferred account. Not sure the special div of a dime is really material. And Kelcey Warren owns millions of units of ETE, the value of ETC should track it, he won't do anything that doesn't benefit his position. And the dividend is protected from corp taxes to 18. This is a great deal. This will be the best bet in the sector over the next three years and beyond. As for ETE getting lucky, I own units, it was $34 dollars at the deal and it's $22 now, not sure I would say I was lucky in the short run. WMB got lucky in hooking up with probably the best co in the sector.
I keep thinking that these boards could help small investors with posters adding different views and info, but too often, they deteriorate into silliness. I have been amazed in this deal how many people didn't really understand the currency in the offer. ETE is a complicated entity now and will get more complicated after the merger, but expect that they will streamline the org over time. Wouldn't be surprised to see them do another acquisition soon, will probably surprise investors, but Warren is positioning for the long term and prices for other cos are cheap. TRGP? I'm fairly positive today on that the worst for the sector is behind, $75 oil and $3 gas end of next year but who knows. And rates, the 10 yr T note at 2.03% with ETE selling for maybe a 7% yield on next years div. 7% yield with 20% growth vs 2% fixed income, seems an easy decision to me.
These lawsuits will produce nothing. If anything the Board of WMB could be accused of going too far in ensuring that shareholders got maximum value for their shares. The opened it up to an auction, and the ETE was best deal and created more value for WMB owners than staying independent. These lawsuits rarely get anything and when they do it's a few pennies for stockholder and millions of $s for the lawyers. Not even worth bothering with. The Board went well beyond what a prudent Board would do. My contention is in their drawn out, conservative approach, they probably missed out on ETE raising the share exchange ratio by a small amount in the spring. This was a classic merger where both shareholder groups are better off with the merger than remaining independent. Short term ETE would probably have done better but longer term the returns will be greater and that's what ETE's Warren saw. The premiere infrastructure franchise in the world's best potential for energy growth. This will be viewed in 5 years as visionary deal. But most "investors" have a 5 day attention span.
WMB deal value at ETE $22 currently, $41 value. The down draft in prices wasn't related to the deal. WMB at $35 was a buy of a decade. $75 value in couple of years. By the time this closes in 6 mos, people will have forgotten this episode and the deal will look better, the synergies are tremendous.
Credit Suisse put out comment, even with sector growth down from 8 to 5%, from low on Tuesday, expected total return over next year, 50%. And WMB/ETE will be the best positioned co in the sector. ETE $40 share value end of next year.
You aren't even lucid in your comments. The Williams Comm venture was a debacle and it was well over a decade ago. Get over it. Posters on this board don't even know or care about it.
And one share of ETC is equal to the value of one unit of ETE. ETE gave up 52% of the equity in the merged company. And there half of the merged company's asset were projected to grow by 25% per year vs 10% to 15% per year for WMB. And they paid a 30% premium at the date of the offer. Higher dividend and higher growth, what's not to like.
Good assessment, Warren has been a couple of steps ahead of everyone else in the sector, and I'm hoping it continues. I wouldn't be surprised to see him do couple of more deals soon. TRGP could be bought for half of what he offered last year, and ETE would control more of the Permian. He probably has an end game strategy a decade out. ETE could end up being merged with one of the major integrated companies. This cycle started with companies shedding midstream assets to focus on e and p. ETE/ETC could be $60 in 18. WMB share value, $112 per share. This downturn will be forgotten, remember 09. There are a bunch of great midstream buys in the market today, agree.
He's been on this board for over a decade, still has some lingering anger about Williams Communications, most don't even remember that episode. Obsessed is a kind label.
They did give a premium, it's in the price right now. Take away the offer and WMB falls. This deal is going through. They have private equity holders of big chunks of stock on the Board and it will be approved. Hold onto you stock for six months and vote no or sell. You will continue to get your WMB div of 64 cents a quarter, so you won't lose anything on the div. Probably by the time it closes, ETE will be back to $30 per share and the WMB value will be $56, not a bad return on $36 today.
ETE and ETC have the same economic value in the assets of the merged company. ETE and ETC should trade approximately at the same price. When the deal was first made public, the 1.8716 shares of ETC/ETE was a 30% premium to WMB's stock price. In the merged company, WMB owners will have 52% equity interest in the merged company, they are getting a share in a faster growing company. The value of the WMB shares converted to ETC will havd a greater value than if no deal were done. The dividend is greater next year and the growth rate after next year is substantially higher for the merged co. It is a good deal. If you bought at $50 wanting to make a couple of dollars, it was a bad bet. If you had bought any other MLP at the same time, it would have been a bad bet. Management, the board, got all the could out of the deal. Just bad timing in terms of the macro, the whole sector is down. Get over it.
This is a good deal, ETE says the div next year will be greater than WMB's guidance, $2.85. Assume $3, which equates to around $1.60 per share of ETC/ETE. $1.60 div at a 4% yield, conservative for a GP growing at 20% plus per year, values the stock at $40, a double from today. Converted to WMB value $40x 1.8716, $75 value for WMB stock. WMB with no deal, next year's div $2.85 at 4% yield, $70 stock. The growth for the ETE/WMB merged company should be 20% plus for the next few years, WMB guidance had 10 to 15% growth, not bad, but not 20% plus. The merged company is a better bet than WMB stand alone going forward. And it will be probably the best infrastructure franchise in the country. This is a great deal. And today's stock price today is a great buy. The offers never were $64 or $43 or whatever, they were 1.8716 shares of ETE.
ETE is down more than WMB since the offer was disclosed, 45% vs 30%. Should the ETE shareholders fire their CEO. KMI is down more than WMB for that time frame. Maybe the WMB CEO should be applauded for his decisions. It's not about the deal, it is a better co merged than alone. Without the deal WMB could be at $30 now.
The values are irrational. This combination should be the best pipe franchise in the country. Guidance is WMB owners should get bigger div next year than the guidance and the growth after that will be higher. $2.85 old guidance, guess maybe $3, $35 stock price, 8.5% yield on next year's payout and growth over 15% per year through the end of the decade. Values and stock prices have disconnected. 10 yr t note pushing 2%. Not as cheap as 09 but getting close. Bought more WMB today sub $35.
Finally, someone gets what's going on. It's the macro environment, not the deal, which is a good one. Could WMB have gotten more in the spring, probably, but they probably guessed that the commodity deck would improve. And the sale process, kind of hard to negotiate when you didn't have any other bids. Not handled well.
ETE should be the premiere pipe franchise over the next few years. Buy WMB today and will be very pleased in a couple of years. Markets are not always rational. You have to look at values relative to price. Almost as cheap as the 08/09 period.
The comment below, the dividend for next year will be more and the growth will be more post 16. WMB guidance was $2.85 next year with the WPZ deal. Assume it's $3 next year, $1.60 for ETC, at a 5% yield, which could be argued as too high, WMB stock value would be $60. At 4%, $75 value.
Scotia Howard Weil downgrades WMB to Sector Perform from Sector Outperform and sets target price at $38
to coincide with the implied offer price after the decline in ETE shares yesterday. Although firm was surprised that WMB agreed to essentially the same offer as originally proposed by Energy Transfer back in June, they view this as a reflection of the deterioration in the midstream space over the past few months. Ultimately, the combination with Energy Transfer should improve the financial profile of WPZ through cost savings and commercial synergies, and provide WMB shareholders with a higher dividend payment and increased growth potential. Post merger, the pro forma dividend for '16 and dividend growth post-'16 is expected to be higher than the previous WMB guidance after the proposed WMB merger with WPZ.