Shares of Energy Transfer Equity fell 8.8% on the news while Williams’s shares were down 9%.Foreign MarketsEuropean markets were sharply lower today. The combination will create the third largest energy franchise in North America and one of the five largest global energy companies.
According to The Wall Street Journal, Williams had hired advisers to run an auction that drew other bidders, but in the end, Energy Transfer prevailed Monday with a bid that values Williams shares at $43.50, a 4.6% premium to their closing price Friday.
Williams stockholders electing to receive stock will get 1.8716 Energy Transfer shares for each share held.
ETE management said its balance sheet, combined with the footprint of Williams, will “benefit customers by enabling further investments in capital projects and efficiencies that would not be achievable absent the transaction”. Williams offers Energy Transfer more access to the northeastern USA, where connections are needed to bring surging output from the Marcellus Shale in Pennsylvania to New York and New England. ETE’s willingness to proceed with the proposed acquisition was contingent on the termination of the Williams/Williams Partners transaction. The MLP said this morning that it has agreed to acquire Williams Companies in a cash and stock deal worth almost $38 billion. Williams’ stockholders will also receive a one-time special dividend of 10 cents per share that will be paid immediately before the acquisition closes.
The deal was approved by both companies’ boards.
A previous deal with Williams Partners LP has been terminated. The surge in output from the region has upended the nation’s gas markets, as well as the majority of the USA pipeline network that was previously created to deliver gas from the Gulf Coast.
Energy Transfer Chief Executive Kelcy Warren, who founded the company in 1995, has made no secret of his appetite for more deals. About two weeks ago, Energy Transfer was apparently the last one standing in the process after Reuters reported that Spectra Energy (ticker: SE) pulled out of the Williams sweepstakes. ETE shares plunged 13% to $20.29 and Williams dropped 12% to $36.56. Its lines connect some Energy Transfer businesses. Size can be judged any number of ways, but Energy Transfer has 71,000 miles of pipeline is and Williams has 33,000. The shares were bought at an average cost of $45.11 per share, with a total value of $59,770.75. Williams Partners is an industry-leading, large-cap master limited partnership with operations across the natural gas value chain from gathering, processing and interstate transportation of natural gas and natural gas liquids to petchem production of ethylene, propylene and other olefins.