The stock has lost almost a third of its value since June, when Williams rebuffed the earlier offer, saying it significantly undervalued the company. Following the acquisition, the director now owns 6,020 shares of the company’s stock, valued at $294,197.40. The stock will come in the form of shares of the newly formed Energy Transfer Corp LP, which will be publicly traded under the ticker symbol ETC, and taxed as a C-corp but tied to Energy Transfer Equity’s economics.
Williams had hired advisers to run an auction that drew other bidders, according to people familiar with the matter.
Under the terms of the deal announced this morning, Energy Transfer will pay $43.50 for each share of Williams, an nearly $2 premium to the closing price Friday.
Energy Transfer, which now operates about 71,000 miles of oil and gas pipeline, will add more than 30,000 miles with the Williams acquisition. Williams offers Energy Transfer more access to the northeastern US, where connections are needed to bring surging output from the Marcellus Shale in Pennsylvania to New York and New England.
Williams’ crown jewel is Transco, the largest US gas pipeline system.
Williams Chief Executive Alan Armstrong said the combined company will be better placed to deal with low energy prices.
The Williams portfolio also includes the Gulfstream pipeline, which carries gas across the Gulf of Mexico to Florida.
“The deterioration of oil field economics lately has accelerated the need for consolidation”, said Ethan Bellamy, an analyst at Robert W. Baird, in an interview earlier this month. The Business ‘s operating segments comprise Intrastate Transfer and Storage segment; Interstate Transportation and Storage section; Midstream section; Liquids Transportation and Services section; Investment in Sunoco Logistics section; All Other section and Retail Promotion section.
Many energy infrastructure companies are set up as partnerships that promise to distribute increasing amounts of cash to investors, which puts them under pressure to build new projects or to buy rivals to keep growing.
The deal comes about three months after Tulsa, Okla-based The Williams Cos. That move was similar to a restructuring by Kinder Morgan Inc. last year, and would have helped unburden the company of hefty payments that sometimes weigh down partnerships. Williams Cos. will pay $428 million in termination fees.
At the time, Energy Transfer Equity had been trying to convince The Williams Cos.to unwind a plan to acquire the remaining portions of a subsidiary, Williams Partners, that it did not already own.
Energy Transfer Equity said it plans to spend $5 billion on capital expenditures, a lot of it in the northeast and Appalachia.
Valero Energy Partners LP (NYSE:VLP) has seen a rise of 13,304 shares or 2.7% in the short interest.