Williams Partners, Access Midstream Partners To Merge In $50 Bln Deal

(RTTNews) - Pipeline operator Williams Companies Inc. (WMB) said Sunday that its master limited partnership William Partners LP (WPZ) will merge with pipeline company Access Midstream Partners LP (ACMP) in a deal valued at about $50 billion. Williams holds controlling interests in the two master limited partnerships, or MLPs.

The transaction terms have been improved for both Access Midstream or ACMP and William Partners or WPZ, compared to the original proposal announced by Williams in June 2014.

At that time, Williams agreed to acquire control of Access Midstream Partners for $5.995 billion in cash, enabling the company to boost its presence in areas with major shale gas formations. Williams had acquired 100 percent of ACMP common units and 50 percent of the limited partner interest in ACMP owned by Global Infrastructure Partners.

The merger is expected to occur by early 2015. As a result of the merger, WPZ will become wholly owned by ACMP. The merged MLP will retain the name Williams Partners L.P. (WPZ) and be based in Tulsa, with major offices in Oklahoma City, Houston, Pittsburgh, Salt Lake City and Calgary.

Alan Armstrong, Chief Executive Officer of Williams said, "This is another big step toward our goal of becoming the leading natural gas infrastructure provider in North America. The combination of Access Midstream Partners' intense focus on natural gas gathering with Williams Partners' broader service offerings along the value chain is yielding even more robust growth opportunities."

Williams said it plans to complete the drop-down of its remaining NGL & Petchem Services assets and projects by late 2014 or early 2015 in order to complete its transition to a pure-play general partnership holding company.

Under the original terms of the merger deal, Williams had proposed that ACMP would acquire WPZ at an exchange ratio of 0.85 ACMP common units for each WPZ common unit plus additional consideration of $0.81 per WPZ common unit to be paid by ACMP in cash or additional ACMP common units.

However after subsequent talks, the parties have now agreed that the WPZ public unitholders would receive 0.86672 ACMP common units, which represented the original 0.85 ACMP common units plus additional consideration of about $1.02 per WPZ common unit in the form of additional ACMP common units, based on the closing price of ACMP as of October 24, 2014.

Further, Williams has agreed to reduce the exchange ratio it would receive in the merger, to offset the about $1.02 of value provided to the WPZ public unitholders.

Prior to the completion of the merger, ACMP will effect a subdivision of its common units. Each public unitholder of ACMP will receive 0.06152 additional ACMP common units for each ACMP common unit held by them.

The public unitholders of ACMP will now receive a total of about 6.3 million new ACMP common units valued at about $381 million, or about $3.74 per public ACMP common unit. The 6.3 million units, or about $381 million, represents additional value for ACMP public unitholders compared to the original June proposal.

Upon consummation of the merger, Williams expects to receive about 251.5 million ACMP common units, representing a net effective exchange ratio of about 0.82080 ACMP common units for each WPZ common unit held by Williams.

After giving effect to the merger and related transactions, Williams anticipates holding about 353.3 million ACMP common units, representing a 58.8 percent stake in the limited partner interest in the merged MLP.

Williams noted that in the merger, it will receive about 8.9 million fewer ACMP common units, or about $544 million, based on the closing price of ACMP as of October 24, 2014, than it would have received in the June proposal.

The merger will create a premier large-cap master limited partnership, with expected 2015 adjusted EBITDA of more than $5 billion and annual limited partnership unit distribution growth rate of 10 to 12 percent through the 2017 guidance period.

The company expects cash distributions for 2015 to total $3.65 per limited partner unit, up 50 percent and 30 percent over ACMP's 2014 and 2015 distribution guidance, respectively.

The merged master limited partnership expects to pay regular cash distribution of $0.85 per unit in the first quarter of 2015, representing a 53 percent increase over the ACMP distribution paid in the first quarter of the prior year. The companies expect to announce full financial guidance for the merged MLP following completion of the merger.

Williams has increased its third-quarter 2014 dividend by 32 percent to $0.56, or $2.24 on an annualized basis. The increase in the third-quarter dividend resulted from Williams' July 1 acquisition of controlling interests in ACMP as well as the decision to accelerate its planned shift to a pure play general partner holding company.

Williams expects excess cash flow available after dividends of more than $300 million for the two-year-period from 2015 through 2016.

Following closing of the merger, Mike Stice will continue in his role as a director of the general partner of the merged MLP. Stice, who currently serves as chief executive officer of the general partner of ACMP, will retire as an officer of the company upon the closing of the merger.

Robert Purgason, currently COO of the general partner of ACMP, is expected to join Williams as senior vice president overseeing the ACMP operations. Purgason will report directly to Williams' president and CEO Alan Armstrong.

On completion of the merger, Purgason is expected to serve the merged MLP as one of its general partner's senior vice presidents, rather than as its COO.

David Shiels, who currently serves as chief financial officer of the general partner of ACMP will leave the company to pursue other opportunities after the merger closes. He will continue in his current role until the merger is complete.

WMB closed Friday's trading at $53.24, up $0.14 or 0.26 percent on a volume of 4.64 million shares.

WPZ closed Friday's trading at $50.00, down $0.47 or 0.93 percent on a volume of 1.29 million shares and ACMP closed trading at $60.83, down $0.27 or 0.44 percent on a volume of 318,746 shares.