TULSA, Okla. (AP) - A Tulsa-based natural gas company has agreed to acquire all public equity of its subsidiary.
Williams Companies will purchase all of the outstanding public common units of Williams Partners as part of an agreement announced Thursday. The stock-for-unit transaction is valued at $10.5 billion, the Tulsa World reported .
The announcement follows a Federal Energy Regulatory Commission decision earlier this year to revise a tax policy permitting master limited partnership interstate oil and natural gas pipelines to maintain an income tax allowance in cost-of-service rates.
“This strategic transaction will provide immediate benefits to Williams and Williams Partners investors,” said Williams CEO Alan Armstrong. “Today’s announcement will maintain the income tax allowance that is included in our regulated pipeline’s cost-of-service rates. This transaction also simplifies our corporate structure, streamlines governance and maintains investment-grade credit ratings.”
Williams Companies will acquire all 256 million public outstanding units of Williams Partners at a fixed exchange ratio of almost 1.5 Williams shares for each public unit of Williams Partners.
The parent company employs more than 5,000, while Williams Partners does not have a separate workforce. Williams employees who work in support of the subsidiary assets will not be affected by the deal other than they will be managing assets 100 percent owned by Williams, said Keith Isbell, Williams spokesman.
Williams Companies owns nearly 75 percent of Williams Partners, which owns and operates more than 33,000 miles of pipelines, including the Transco pipeline.
“The acquisition for Williams of Williams Partners is a win-win as it brings their crown jewel, the Transco Pipeline, which delivers natural gas from the Gulf Coast into New York City, back in-house, and it should allow Williams to increase its dividend payout to shareholders,” said Jake Dollarhide, CEO of Longbow Asset Management Co.
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Information from: Tulsa World, http://www.tulsaworld.com
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