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Williams Companies Completes Merger With Williams Partners

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Williams Companies, Inc. (WMB - Free Report) received approval from shareholders to purchase the shares of Williams Partners LP. The transaction has been completed and Williams Partners’ common units will no longer be publicly traded on the New York Stock Exchange from Aug 13, 2018.

Per the agreement, announced in May 2018, Williams Companies purchased all of the 256-million outstanding public common units of Williams Partners in an all stock-for-unit transaction at about $10.5 billion. The exchange ratio is 1.494 of the company’s shares for each public unit of Williams Partners.

Based on an exchange ratio of 1.494, Williams Companies will issue about 382.5 million shares related with the planned transaction, representing about 31.6% of total shares outstanding of the merged entity. The transaction will be taxable to Williams Partners unitholders, and Williams will get the tax benefits from the basis step-up. This will lead to extension of the period to which Williams is not anticipated to be a cash taxpayer through 2024.

More than 99% of Williams Companies’ shares that were voted were  in favor of the Merger and the Amendment. The shares voted comprised about 82% of Williams’ total outstanding shares as of the record date.

This decision to merge came after Federal Energy Regulatory Commission announcement in  2018 to alter a tax policy that allowed master limited partnership interstate oil and natural gas pipelines to retain an income-tax allowance in cost-of-service states.

Williams Companies has a workforce of more than 5,000 people, while Williams Partners does not have a separate workforce. The merger will not have any impact on the employees. The workforce will manage assets that are wholly-owned by Williams Companies, post the closure of the deal.

On completion of the transaction, Williams Partners has become a fully-owned subsidiary of Williams Companies.

Price Performance

Williams has outperformed the industry in the past year. The company’s shares have risen 5.6%, against the industry's 3.5% decline.



 

Zacks Rank & Stocks to Consider

Williams currently carries a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Petroleo Brasileiro S.A. (PBR - Free Report) , or Petrobras S.A, Helix Energy Solutions Group, Inc (HLX - Free Report) and TC Pipelines, LP . All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Petroleo Brasileiro S.A. (PBR - Free Report) , or Petrobras S.A., is the largest integrated energy firm in Brazil and one of the largest in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.

Helix Energy, offers specialty services to the offshore energy industry The company delivered an average positive earnings surprise of 66.7% in the trailing four quarters.

TC Pipelines purchases, owns and actively participates in the management of United States based natural gas pipelines and related assets. The company delivered an average positive earnings surprise of 3.7% in the last four quarters.

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