U.S. Markets closed

Williams Issues New Shares to Fund Access Midstream Buy

Paul Ausick

When Williams Companies Inc. (WMB) announced on Sunday night that it would pay $6 billion to acquire Access Midstream Partners L.P. (ACMP), the company said it would pay for the acquisition in cash. On Tuesday, Williams priced a secondary stock offering of 53 million shares at $57 per share in a bid to raise about $3 billion to fund the purchase. Williams' shares closed at $57.31 on Tuesday afternoon.

The underwriters have been granted a 30-day option on an additional 7.95 million shares. Joint book-runners for the offering are Citigroup, Barclays and UBS Investment Bank.

Williams offer to buy Access and merge it with Williams Partners L.P. (WPZ) is a transformational move for the company, which will become a pure-play general partner (GP) holding company once the acquisition and merger are completed.

ALSO READ: Ten Cars Americans Don't Want to Buy

Analyst reaction to the buyout was generally positive. Jefferies raised its rating on Williams from Hold to Buy and its price target to $65. Credit Suisse also raised its price target on the stock to $65. At that price target, Williams' stock has an implied gain of 14% above the secondary's price.

Shares of Williams traded at $57.55 in the noon hour on Wednesday, in a 52-week range of $31.25 to $59.68. The high was set Monday morning following Sunday's announcement of the acquisition.

Related Articles