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A merger between the ACMP (Access Midstream Partners LP) and WPZ (Williams Partners LP is being proposed after a purchase of $6 billion worth of shares, which may make one of the biggest ever U.S. fuel transporters during a period when there is an exploration of increased natural-gas.
In an official statement, Williams Partners revealed that the company in charge of Williams Partners, Williams Cos has agreed upon buying control from Global Infrastructure Partners II of the Access Midstream. The joint business entity will now have a market value of nearly $36.9 billion.
This deal has come in the midst of surging local energy production and pipeline demands which has been dubbed by the Williams Cos as an “ongoing energy infrastructure super-cycle.” Further advancements of drilling technologies involves a method called fracking which has helped the country come to terms with its energy needs, while needing newer methods of moving fuels to the market.
With around $13.2 billion market capitalization, Access will offer gas and oil collection services to Anadarko Petroleum Corp, Chesapeake Energy Corp., and various other exploration companies as per 2013 yearly report. Their shares have gone up by 16% so far this year.
The Chief Executive officer of William, Alan Armstrong stated – “We expect the acquisition to deliver immediate and future dividend growth for Williams’ shareholders and to further enhance our presence in attractive growth basins. In addition, we expect the acquisition of Access Midstream Partners will fortify Williams’ stable, fee-based business model and support our industry-leading dividend growth strategy.”
This deal was clinched around 4 months after the company kept away a possible proxy fight while giving away board seats to Eric Mandelblatt and Keith Meister, activist investors who pushed them to take into consideration “strategic combinations.”
As per the statement, Williams asked for an exchange of 0.85 Access units for every Williams Partners unit. Williams shut down at $52.92 on Friday as compared to $65.36 for Access which implied a premium of 5%. In a separate statement, Access Midstream indicated that they were not in favour of a merger but will consider the proposal. The CEO of Access Midstream, Mike Stice stated – “since Williams invested in ACMP in 2012, it’s been clear to me that our companies share many common values.”
This purchase, which is not contingent on the related merger, will increase the ownership of Williams over Access to a 50% of the limited partnership and a 100% of the general partnership as per the statement.