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Williams Cos to buy Williams Partners for $13.8 billion

Staff writer ▼ | May 13, 2015
Williams will acquire all of the public outstanding common units of Williams Partners L.P. in an all stock-for-unit transaction at a 1.115 ratio of Williams common shares per unit of Williams Partners.
Acquisition   A deal in the oil and gas pipeline industry
The implied Williams Partners unit price as of May 12, 2015 represents a 14.5% premium to its 10-trading day average closing price and a 12.6% premium to its 20-trading day average closing price.

Upon completion of the proposed transaction, expected to occur in the third quarter of 2015, the combined entity is anticipated to be one of the largest and fastest-growing high-dividend paying C-Corps in the energy sector with an industry-leading 10 percent to 15 percent annual dividend growth rate through 2020.

The combined entity is expected to generate adjusted EBITDA of approximately $5.4 billion in 2016. The combined entity expects to pay a third quarter 2015 dividend of $0.64 per share, or $2.56 per share on an annual basis, up 6.7 percent over Williams' previously planned third quarter 2015 dividend of $0.60 per share.

Dividends for 2016 are expected to total $2.85 per share, about 20 percent above Williams' previously guided 2015 dividend and 6.3 percent above its previously guided 2016 dividend. The expected quarterly dividend increases are subject to quarterly approval of the company board of directors.

Under the terms of the merger agreement, Williams will acquire all of the 247 million public outstanding units of Williams Partners at a fixed exchange ratio of 1.115 Williams shares for each public unit of Williams Partners.

In aggregate, Williams will issue 275.4 million shares in connection with the proposed transaction, representing approximately 27 percent of the total shares outstanding of the combined entity. The transaction will be taxable to Williams Partners unitholders, and Williams will receive the tax benefits from the asset step-up to be realized over a 15-year period.

Williams has reviewed the proposed transaction with the rating agencies and expects the combined entity will have strong investment grade credit ratings consistent with Williams Partners' current ratings and outlook.

Williams will put in place cross guarantees among and between Williams and Williams Partners to be effective on closing of the transaction in order to largely eliminate the structural subordination of Williams.

The merger is expected to close in the fall of 2015 following regulatory filings and the requisite approval of Williams shareholders under NYSE rules. Following consummation of the merger, Williams Partners will become a wholly owned subsidiary of Williams.