Energy Transfer Equity Offers To Merge With Williams In $53.1 Bln Equity Deal

(RTTNews) - Energy Transfer Equity, L.P. (ETE) or ETE Monday confirmed that it has made a proposal to merge with The Williams Companies, Inc. (WMB) in an all-equity transaction valued at $53.1 billion, including the assumption of debt and other liabilities.

ETE will acquire all outstanding common stock of Williams at an implied price of $64 per Williams share, which represents a 32.4 percent premium to the Williams common share closing price as of June 19.

ETE said the combination would be immediately accretive to its distributable cash flow and would take the company to the next level in terms of cash flow diversification and improved credit profile.

The transaction will create the world's largest energy infrastructure group and the third largest energy franchise in North America.

Further, the number of opportunities to migrate assets within the Energy Transfer family and find new commercial opportunities within the expanded asset base would increase significantly, the company said.

The merger consideration will be in the form of common shares in an entity that would elect to be taxed as a C-corp or ETE Corp. Shares of ETE Corp would have the same economic attributes as ETE common units.

The number of ETE Corp shares to be issued to Williams stockholders will be based on a fixed exchange ratio of 0.9358 ETE Corp shares for each Williams share, reflecting ETE's offer of $64 per Williams share and ETE's unit price of $68.39 as of June 19.

This exchange ratio will be subject to adjustment for the two-for-one ETE unit split reported earlier.

ETE Corp would be publicly traded on the NYSE under the symbol "ETC." The transaction will be tax-free to Williams stockholders.

ETE initially made its offer to Williams in a letter on May 19, 2015, to Alan Armstrong, the CEO of Williams, and followed it up with another letter on June 11 to the company's Chairman of the Board. ETE most recently confirmed its offer in a letter on June 18 sent to the Williams Board of Directors.

The company said it made several attempts over an almost 6-month period to engage in meaningful, friendly dialogue with the senior management of Williams regarding a proposed merger.

Meanwhile, on May 13, Williams and Williams Partners L.P. (WPZ) or WPZ announced an agreement for Williams to acquire all of the public outstanding common units of Williams Partners in an all stock-for-unit transaction at a 1.115 ratio of Williams common shares per unit of Williams Partners.

As a result of the announcement of the deal between Williams and WPZ, ETE felt compelled to send its written offer to Williams. ETE said this was to bring its interest to the attention of the Williams Board and to outline what ETE believes is a more compelling transaction than the proposed merger between Williams and WPZ.

According to ETE, a merger with Williams and adding WPZ to its family of partnerships would create significantly more value to the Williams stockholders than the proposed merger of Williams and WPZ.

As part of ETE's proposal, WPZ would retain its current name and remain a publicly traded partnership headquartered in Tulsa, Oklahoma.

ETE said it did not foresee any regulatory impediments to a merger with Williams and that ETE would accept the regulatory risk related to the closing of the merger.

There will be no requirement for an ETE unitholder vote, providing additional deal certainty to Williams stockholders. ETE's offer is conditioned on the termination of the WPZ merger agreement.

Kelcy Warren, ETE's Chairman, said, "Generally, I have not been supportive of transactions that involve the issuance of ETE units given my belief that ETE units remain significantly undervalued. However, I believe that a combination of Williams' assets with ETE will create substantial value that would not be realized otherwise." There is no impact from this transaction on Energy Transfer Partners L.P, Sunoco Logistics Partners L.P. or Sunoco L.P.

ETE closed down 1.8 percent on Friday at $68.39. WMB closed down 1.3 percent at $48.34.