Close on the heels of announcing a $6.0 billion acquisition, Williams Companies Inc. (WMB) disclosed plans of a $3.0-billion worth share offering to the public for part sponsorship of the buyout. The acquisition entails the North American energy firm’s remaining 50% general partner (GP.V) interest and 55.1 million limited partner (:LP) units in Access Midstream Partners LP (ACMP).
Williams Companies added that as per the conditions of the issuance, the underwriters can buy up to 450.0 million extra shares within a period of one month to cover over allotments, if any.
Williams Companies recently declared that it would increase the GP and LP interests in Access Midstream – a master limited partnership (MLP) engaged in the midstream business – to 100% and 50%, respectively, by the third quarter. Williams Companies will also merge the energy infrastructure provider, Williams Partners LP (WPZ) with Access Midstream. Post acquisition, Williams Companies will hike its third quarter dividend 32.0% sequentially to 56 cents per share. This gave investors reason to cheer the news, and the stock surged 18.7% on NYSE.
Tulsa, OK-based Williams Companies is a premier energy infrastructure provider in North America. But we are concerned with the company’s extensive natural gas exposure, which raises its sensitivity to the volatile commodity’s price.
Williams Companies currently retains a Zacks Rank #3 (Hold), which implies that it is expected to perform in line with the broader U.S. market in the next one to three months.
Meanwhile, one can look at better-ranked players in the same industry like Atlas Energy LP (ATLS). This stock sports a Zacks Rank #1 (Strong Buy).