Williams Cos. Sweetens Terms for MLPs' $50 Billion Merger

Williams Cos. (WMB) said Sunday, Oct. 26, that its master limited partnerships Williams Partners LP (WPZ) and Access Midstream Partners (ACMP) sweetened the terms of their merger, valuing the transaction at $50 billion.

Williams Partners unitholders will get 0.86672 of an Access unit for each unit they hold, up from 0.85 plus 81 cents per unit in cash or more Access units than in the June proposal. Access unitholders will also get 0.06152 more units for each one they hold, or 6.3 million in total valued at $3.74 per unit, or $381 million.

Williams Cos., the natural gas company based in Tulsa, Okla., also agreed to cut the exchange ratio it will receive from the deal to offset the $3.74 per unit of value Access unitholders are getting.

Williams Cos. will end up with more 251.5 million Access units representing an exchange rate of 0.8208, giving it 353.3 million units, or 58.8% of the limited partner interest, versus 306.4 million Williams Partners units and 101.8 million Access units previously. Williams Cos. is getting 8.9 million fewer Access units worth $544 million than in the June proposal but will continue to own 100% of the general partner and related incentive distribution rights and control the merged MLP.

Simmons & Co. International said the exchange ratio represents a 5.5% premium for Williams Partners units, although Access units pay a lower annualized distribution of $2.38 per unit versus $3.71 for Williams Partners.

Williams Cos. initially proposed the merger on June 15 when it announced that it had acquired Access units and general partner interests owned by Global Infrastructure Partners for $5.99 billion. That deal came together only a few months after Williams Cos. agreed to give activists Keith Meister of Corvex Management LP and Eric Mandelblatt of Soroban Capital Partners LLC board seats in exchange for the hedge funds dropping a potential proxy fight. The activists had pushed for Williams to look into strategic combinations.

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