Williams Strikes $2.4B Pipeline Deal

North American energy firm Williams Companies Inc. ( WMB - Analyst Report ) has agreed to acquire a 25% stake in natural gas partnership Access Midstream Partners L.P. ( ACMP - Snapshot Report ) and a 50% interest in its general partner – Access Midstream Partners GP LLC – from private equity firm Global Infrastructure Partners. The transaction, valued at $2.4 billion, is expected to close by the end of 2012.

Oklahoma City-based Access Midstream Partners, which was spun off from U.S. gas producer Chesapeake Energy Corp. ( CHK - Analyst Report ) in June and is now controlled by Global Infrastructure Partners, provides natural gas gathering and processing service in the country’s major unconventional basins.

The acquisition will allow Williams – the third-largest U.S. pipeline company – to broaden scale and scope of its infrastructure services is some of the most promising shale gas producing regions. Additionally, Williams expects the stake buy to benefit its dividend growth starting from 2014.

In another development, Williams has commenced a public offering of 46,500,000 shares of its common stock. The company also intends to provide the underwriters with a 30-day option to purchase up to 6,975,000 additional shares.

Williams plans to use a part of the net proceeds from this offering to finance the above-mentioned acquisitions of stakes in Access Midstream Partners L.P. and Access Midstream Partners GP LLC.

Tulsa, Oklahoma-based Williams is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing, and transportation of natural gas.

Williams is currently a Zacks #3 Rank (Hold) stock, implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months. We are also maintaining our long-term Neutral recommendation on the stock.