Williams Partners, Access Midstream finalise merger terms

Pipeline operator Williams Companies Inc, holding controlling interests in Williams Partners LP and Access Midstream Partners LP, have amended the terms of their merger agreement, Reuters reported.

Under the revised terms, Williams Partners would merge with a subsidiary of Access Midstream in a unit-for-unit exchange of 0.86672 common units of Access Midstream for every Williams common unit.

The merger had been first proposed by Williams in June, with Access Midstream acquiring William Partners at an exchange ratio of 0.85 plus an additional $0.81 per Williams Partners' common unit in cash or additional Access Midstream common units.

The Tulsa, Oklahoma-based Williams said it agreed to cut exchange ratio it would receive in the merger to offset the about $1.02 of value provided to the Williams Partners' public unit holders.

On completion of the deal, Williams Partners would be wholly owned by Access Midstream and the merged master limited partnership (MLP) would be named Williams Partners LP.

The companies said in a statement late on Sunday that the deal had a total transaction value of about $50 billion.

MLPs are not subject to federal income tax and had gained immense popularity among investors looking for higher yields, even though their structures often had corporate governance standards weaker than those of corporations.

According to Williams' chief executive Alan Armstrong, this was another big step in the company's goal of becoming the leading natural gas infrastructure provider in North America.

Williams said in a press release: "Both Access and Williams Partners are experiencing robust growth, and this growth will benefit both our customers and our employees," said ACMP's chief executive officer Mike Stice. "We expect customers to benefit from the expanded organizational capability and enhanced national scale that the combined business provides. We're already seeing employees benefit from opportunities for advancement and from the additional benefits of being a member of the larger Williams family."

The merged MLP will feature large-scale positions across three key components of the midstream sector, including natural gas pipelines, gathering and processing and natural gas liquids and petrochemical services.

  • Natural Gas Pipelines – Transco, Northwest and Gulfstream represent the nation's premier interstate pipeline network. Transco is the nation's largest and fastest-growing pipeline system.
  • Gathering and Processing – Large-scale positions in growing natural-gas supply areas in major shale and unconventional producing areas, including the Marcellus, Utica, Piceance, Four Corners, Wyoming, Eagle Ford, Haynesville, Barnett, Mid-continent and Niobrara. Additionally, the merged MLP's business would include oil and natural gas gathering services in the deepwater Gulf of Mexico.
  • Natural Gas Liquids and Petrochemical Services – Unique downstream presence on the Gulf Coast and in western Canada provides differentiated long-term growth.