The Williams Cos. Inc. has agreed to acquire the full general partners stake in Access Midstream Partners LP for nearly $6 billion, the Tulsa-based company announced Sunday.
Williams intends to merge Access with its own pipeline master limited partnership, Williams Partners LP.
“The proposed merger of Williams Partners and Access Midstream Partners, if consummated, would create an industry-leading, large-scale MLP with substantial positions across the midstream business – spanning natural gas gathering and processing, natural gas transmission pipelines, and NGL and petchem services,” Williams CEO Alan Armstrong said. “Our positions in these businesses provide clearly identified growth for the foreseeable future.”
Access Midstream was once a subsidiary of Chesapeake Energy Corp. It was formed as Chesapeake Midstream Partners in 2009 with help from private equity firm Global Infrastructure Partners.
The equity firm acquired Chesapeake’s stake in the partnership for $2 billion in July 2012, spurring the name change to Access Midstream.
Williams bought into Access Midstream in December 2012 when it helped bankroll the partnership’s $2.16 billion purchase of most of Chesapeake’s remaining midstream assets. Now it is buying out Global Infrastructure Partners II’s stake.
The deal announced Sunday will give Williams full control of Access Midstream’s general partner and 50 percent of the partnership’s outstanding units.
Access Midstream CEO Mike Stice said Sunday he is excited about the partnership’s future under Williams.
“Since Williams invested in ACMP in 2012, it’s been clear to me that our companies share many common values on matters such as customer service, operational excellence and the focus on the development of our employees,” Stice said. “With respect to the proposed merger of ACMP and WPZ, I am confident that ACMP’s board of directors will engage in a thorough analysis and process to provide a positive outcome for ACMP unitholders.”
The new combined midstream company is expected to be based in Tulsa, with major offices in Oklahoma City, Houston, Pittsburgh, Salt Lake City and Calgary. It would be one of the largest and fastest growing master limited partnerships, with adjusted earnings expected to be about $5 billion in 2015.
Williams’ merger proposal is a unit-for-unit exchange of .85 Access Midstream units for each Williams Partners unit. Williams Partners unitholders also would have the option of taking a one-time special payment of 81 cents a unit, or the equivalent value of additional Access Midstream units, to compensate for expected lower per-unit cash distribution in 2015.
The Access Midstream deal is expected to help Williams boost its third-quarter dividend by 32 percent to 56 cents a share.
Williams will finance about half of the $5.995 billion deal with equity. The rest will come from long-term debt, revolver borrowings and cash on hand.
The deal is expected to close in the third quarter.