June 15 Pipeline operator Williams Companies Inc
said on Sunday it agreed to acquire control of Access
Midstream Partners LP for $5.99 billion as the first
step in merging it with its operations, aiming to enlarge its
role in the U.S. natural gas boom.
The deal gives Williams, the fourth-largest U.S. pipeline
company based on market capitalization, control over the
industry's largest gathering and processing master limited
partnership (MLP) as measured by throughput volume.
A subsequent merger of Williams' MLP, Williams Partners LP
, with Access, will, if successful, create one of the
largest MLPs by enterprise value - close to $100 billion.
Exempt from federal income tax, MLPs have been hugely
popular among investors seeking higher yields, even though their
structures often have corporate governance standards weaker than
those of corporations.
Under the agreement unveiled on Sunday, Williams will
acquire the 50 percent stake it does not already own in the
controlling entity of Access, referred to as the general
partner, from infrastructure fund manager Global Infrastructure
It will also acquire 55.1 million shares in Access, referred
to as units, from GIP, boosting its share of Access units from
23 percent to 50 percent. Williams had previously acquired a 50
percent stake in the Access general partner and 23 percent of
the Access units in December 2012.
Williams said it would pay for the latest deal with equity,
debt and cash on hand.
In a second transaction, which has yet to be mutually agreed
and will have to be approved by conflicts committees set up by
the two sides, Williams said it had proposed the merger of
Williams Partners LP and Access.
Under the deal, Access would effectively acquire Williams
Partners in a unit-for-unit exchange at a ratio of 0.85 Access
Midstream Partners units per one Williams Partners unit.
The proposal also includes an option for Williams Partners
unitholders to take either a one-time special payment of $0.81
per unit, or an equivalent value of additional units of Access,
to compensate for a lower expected per-unit cash distribution in
Williams also said it plans to increase its third-quarter
dividend by 32 percent, to 56 cents per share. It also provided
new dividend-growth guidance of about 15 percent annually
between 2014 and 207.
Williams Partners owns interests in three major interstate
pipelines which, combined, deliver 14 percent of the natural gas
consumed in the United States. Access owns and operates more
than 6,300 miles of natural gas pipelines across nine states.
UBS AG, Barclays Plc and Citigroup Inc
acted as financial advisers, while Gibson, Dunn & Crutcher
LLP offered legal advice to Williams.
(Reporting by Greg Roumeliotis in New York; Editing by Dan