Williams Shifts, Restructures – Analyst Blog

Williams Partners L.P. (WPZ) signed a merger agreement under which it will buy the remaining outstanding shares of Williams Pipeline Partners L.P. (WMZ). The deal permits Williams Pipeline unit holders to receive 0.7584 common units of Williams Partners for every unit they hold. William Partners already owns 47.7% of Williams Pipeline.

 

On January 19, 2010, Williams Cos (WMB), the parent company of Williams Partners, said it would restructure its pipeline and processing operations in a bid to speed growth, partly by improving access to capital. Williams Cos announced plans to contribute essentially all of its midstream and natural gas pipeline assets valued at approximately $12 billion to Williams Partners L.P. Consequently, the acquisition by Williams Partners is the concluding step in the restructuring of Williams Cos’ natural gas pipeline and gas processing assets, which should foster growth and long-term value for shareholders.

 

Management anticipates the transaction to be immediately accretive to distributable cash flow and expects it to increase WPZ’s 2010 distribution by 3.5%. In the long term, we expect the partnership’s distribution growth potential to improve due to the sizeable portfolio of organic expansion projects around its midstream and pipeline assets. WPZ should also benefit from the lower cost of capital given its increased size.