Shares of Williams Companies shot up 5.8% in premarket trade Thursday, after the natural gas infrastructure company announced a deal to buy the outstanding common shares of Williams Partners LP in a deal valued at $10.5 billion. Under terms of the deal, Williams will exchange 1.494 of its shares for each Williams Partners share. Based on Wednesday's stock closing prices, that values Williams Partners shares at $40.89 each, or a 6.4% premium. Williams said the deal will immediately add to cash available for dividends, retain significant distributable cash flow coverage, extends the period for which Williams is not expected to be a cash taxpayer through 2024 and provides modest savings. It will also give Williams Partners an investment grade profile. Williams Partners shares were still inactive in premarket trade. Williams stock has dropped 10.2% year to date through Wednesday, while Williams Partners shares have slipped 0.9%, the SPDR Energy Select Sector ETF has climbed 7.3% and the S&P 500 has gained 1.8%.
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