Advertisement
U.S. markets closed
  • S&P Futures

    5,304.25
    -4.00 (-0.08%)
     
  • Dow Futures

    40,140.00
    -36.00 (-0.09%)
     
  • Nasdaq Futures

    18,465.00
    -38.75 (-0.21%)
     
  • Russell 2000 Futures

    2,145.20
    +6.80 (+0.32%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Silver

    25.10
    +0.18 (+0.74%)
     
  • EUR/USD

    1.0794
    -0.0035 (-0.32%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • Vix

    13.01
    +0.23 (+1.80%)
     
  • GBP/USD

    1.2621
    -0.0017 (-0.13%)
     
  • USD/JPY

    151.4370
    +0.1910 (+0.13%)
     
  • Bitcoin USD

    70,747.30
    +1,268.62 (+1.83%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Wired News – The Williams Cos. Acquires All Outstanding Units of Williams Partners L.P.

LONDON, UK / ACCESSWIRE / May 21, 2018 / If you want access to our free research report on The Williams Cos., Inc. (NYSE: WMB) ("WMB"), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=WMB as the Company's latest news hit the wire. On May 17, 2018, the Company announced its plans to acquire all outstanding units of Williams Partners L.P. (NYSE: WPZ) ("WPZ"). The all-stock transaction is valued approximately at $10.5 billion. WMB already owns approximately 74% of WPZ and the current transaction will allow WMB to own 100% of WPZ. Register today and get access to over 1,000 Free Research Reports by joining our site below:

www.active-investors.com/registration-sg

Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, The Williams and Williams Partners most recent news is on our radar and our team decided to put out a fantastic report on the company that is now available for free below:

www.active-investors.com/registration-sg/?symbol=WMB

www.active-investors.com/registration-sg/?symbol=WPZ

Commenting on the transaction, Alan Armstrong, President and CEO at WMB, said:

"This strategic transaction will provide immediate benefits to Williams Cos.' and Williams Partners' investors. Today's announcement will maintain the income tax allowance that is included in our regulated pipeline's cost-of-service rates. This transaction also simplifies our corporate structure, streamlines governance and maintains investment-grade credit ratings."

Terms of the acquisition

As per terms of the acquisition, WMB will acquire 256 million outstanding units of WPZ. WMB has offered 1.494 WMB shares for each unit of Williams Partners under fixed exchange ratio. This could increase to 1.513 WMB's shares for each unit of WPZ if the deal does not close before the record date for payment of WMB's dividend for Q3 2018.

Accordingly, WMB plans to issue approximately 382.5 million new shares under that assumption that 1.494 is the final exchange offer. The new shares represent approximately 31.6% stake in the merged entity. The deal is expected to be taxable for WPZ's unit-holders, while WMB is expected to get tax benefits from the basis step-up.

The deal has been approved by the Board of Directors of WMB and WPZ after the Conflicts Committee of WPZ approved the transaction.

The transaction is expected to close in fall of 2018 subject to receipt of regulatory and shareholders' approval and other closing conditions. Once the deal is completed, WPZ will become the wholly owned subsidiary of WMB. WMB is confident of maintaining investment grade ratings even after the close of the acquisition.

Benefits of the Acquisition

The deal is expected to be immediately accretive to the EPS for WMB's shareholders. As the deal is an all-stock deal, the Company retains a significant amount of cash flow which it plans to reinvest in strategic acquisitions. The deal allows WMB to make significant savings in tax as the Company is not expected to be a taxpayer till end of 2024. The main highlight of the acquisition is that the deal simplifies the organization structure and makes it a value proposition for investors.

On the other hand, the current offer is at a premium of 6.4% of WPZ's closing price on May 16, 2018, before the deal was announced. WPZ's unitholders can get five dividends/distributions in calendar year 2018 which translates to approximately a 15% increase to the previously shared guidance for FY18. WPZ retains income tax allowance for regulated cost-of-service revenue. The deal increases cash holdings which can be invested in attractive capital projects. The deal also allows WPZ's unitholders to increase their equity holdings which translates to increased trading liquidity, float and access to capital markets.

Backdrop

The Federal Energy Regulatory Commission's (FERC) in March 2018 has revised its 2005 income tax policy. The revision allowed master limited partnership (MLP) interstate oil and natural gas pipelines to recover an income tax allowance in cost of service rates. WPZ owns and operates more than 33,000 miles of pipelines system wide including Transcontinental Gas Pipe Line Company (Transco), Northwest Pipeline, and a 50% interest in Gulfstream Natural Gas System. These regulated pipelines contributed to approximately one-third of WPZ's gross margin for FY17. Since FERC's revised policy will only impact cost of service rate calculations on a prospective basis. WPZ's Transco and Gulfstream Natural Gas System will not be impacted by this revision.

The revised FERC policy is expected to impact only a marginal percentage of WMB's revenues. However, the Company had announced in March 2018 that it is open to making changes in its organization structure to take maximum advantage of FERC's revised income tax policy. The changes in the organization structure would allow WMB to restore the income tax allowance as per the pipeline's cost of service rates.

The current acquisition is a result of WMB's deliberations on FERC's revised policy.

About Williams Companies, Inc. and Williams Partners L.P.

Founded in 1908, Tulsa, Oklahoma-based WMB is an energy infrastructure Company which holds approximately 74% stake in WPZ. WMB, including its assets held through WPZ is a premier provider of large-scale infrastructure connecting US natural gas and natural gas products to its customers.

WMB's interstate gas pipeline and gathering & processing operations is spread across US, including strategic assets in the deepwater Gulf of Mexico, the Rockies, the Pacific Northwest, and the Eastern Seaboard. WMB also owns and operates midstream gathering and processing assets, and interstate natural gas pipelines.

Stock Performance Snapshot

May 18, 2018 - At Friday's closing bell, The Williams' stock marginally dropped 0.75%, ending the trading session at $27.80.

Volume traded for the day: 12.58 million shares, which was above the 3-month average volume of 8.32 million shares.

Stock performance in the last month – up 8.81%; and past six-month period – up 1.09%

After last Friday's close, The Williams' market cap was at $23.18 billion.

Price to Earnings (P/E) ratio was at 1112.00.

The stock has a dividend yield of 4.89%.

The stock is part of the Basic Materials sector, categorized under the Oil & Gas Pipelines industry.

Active-Investors:

Active-Investors (A-I) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and Canadian stocks. A-I has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

A-I has not been compensated; directly or indirectly; for producing or publishing this document.

PRESS RELEASE PROCEDURES:

The non-sponsored content contained herein has been prepared by a writer (the "Author") and is fact checked and reviewed by a third-party research service company (the "Reviewer") represented by a credentialed financial analyst [for further information on analyst credentials, please email info@active-investors.com. Rohit Tuli, a CFA® charterholder (the "Sponsor"), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by A-I. A-I is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.

NO WARRANTY

A-I, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. A-I, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, A-I, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.

NOT AN OFFERING

This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither A-I nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://active-investors.com/legal-disclaimer/.

CONTACT

For any questions, inquiries, or comments reach out to us directly. If you're a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: info@active-investors.com

Phone number: 73 29 92 6381

Office Address: 6, Jalan Kia Peng, Kuala Lumpur, 50450 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur, Malaysia

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Active-Investors

Advertisement