Boston, MA 06/16/2014 (wallstreetpr) – Williams Companies, Inc. (NYSE:WMB), a $38 billion pipeline operator, is readying $5.99 billion in cash, equity and debt to acquire a controlling stake in Access Midstream Partners LP (NYSE:ACMP).
The move reflects Williams’ increasing interest in the U.S. natural gas boom. The deal will give the company control of the largest gathering and processing MLP in the country. The latest move also marks the first step by Williams to create the largest MLP of enterprise value of about $100 billion by combining its own MLP known as Williams Partners LP with Access.
The combination of Williams (NYSE:WMB)’s own MLP and Access the second transaction the company is pursuing although it needs more talks to consummate.
In a deal announced Sunday, Williams Companies, Inc. (NYSE:WMB) will purchase 50 percent stake that it does not already in Access. The stake will be acquired from a general partner of Access and infrastructure funds manager Global Infrastructure Partners (GIP). The company will also acquire 55.1 million shares in Access.
The company intends to pay for the latest stake acquisition through equity, debt and cash on hand.
MLPs excite investors
Master Limited Partnerships (MLPs) are exempted from federal income tax, and they pay most of their profits to investors. They are becoming popular among investors looking for high yields. However, MLPs feature corporate governance that is somehow weaker than corporations.
The boom in the U.S. gas shale has seen widespread MLP deals and Williams Companies, Inc. (NYSE:WMB) appears to have just started what could be a huge investment.
Midstream powerhouse
The combination of Access (NYSE:ACMP), the largest gathering and processing MLP in the U.S. and Williams Companies, Inc. (NYSE:WMB), the fourth largest pipeline company in the country, will end up creating a natural gas gathering, processing and transportation force. The powerhouse will boast assets spread across the North America region.
The majority of analysts covering Williams Companies, Inc. (NYSE:WMB) believe that the company will perform positively this year and in the future because of the prospects in the industry and the management acumen that its top leadership has demonstrated in the recent past.
