North American energy firm,
Williams Companies Inc.
) announced the closure of its previously declared purchase of the
remaining 50% general partner (GP) interest and 55.1 million
limited partner (LP) units in
Access Midstream Partners LP
). Williams Companies spent roughly $6.0 billion in cash to procure
the stake and units of the master limited partnership (MLP) engaged
in midstream business. (Read our blog:
Williams Companies to Spend $6B on Access Midstream
The acquisition has given Williams Companies full GP ownership
and 50% LP interest in the Oklahoma City-based partnership. It has
also enhanced its transportation and midstream businesses as Access
Midstream holds a strong portfolio of natural gas pipelines and
gathering assets in the Marcellus, Barnett, Utica, Haynesville,
Eagle Ford, Mid-continent and Niobrara shale regions.
The benefits from the acquisition would be reflected in Williams
Companies' third-quarter dividend, which is expected to increase
32.0% to 56 cents per share. The projected annualized dividend for
2014 and 2015 is $1.96 and $2.46, respectively. From 2015 through
2017, the company plans 15% dividend hike.
Williams Companies also has a plan to merge energy
Williams Partners LP
), which it owns with a 72% stake, with Access Midstream Partners.
As per the terms of the merger, for every unit held, Williams
Partners' unitholders will get 0.85 units of Access Midstream
Partners. Moreover, in order to compensate for the likely lower
cash distribution in 2015, Williams Partners' unitholders can
either opt for a one-time payment of 81 cents per unit or a
comparable value of Access Midstream Partners' extra common units.
The merger is expected to be completed by 2014.
Williams Companies reveals that the merged MLP - likely to
retain its name - will have a lucrative cash distribution. In fact,
it is anticipated to be significantly higher than Access
Midstream's present distribution guidance for 2014 and 2015.
Tulsa, OK-based Williams Companies currently carries a Zacks
Rank #3 (Hold), which implies that it is expected to perform in
line with the broader U.S. market over the next one to three
Better-ranked players in the energy sector include
). The stock sports a Zacks Rank #1 (Strong Buy).
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WILLIAMS COS (WMB): Free Stock Analysis Report
ACCESS MIDSTRM (ACMP): Free Stock Analysis
WILLIAMS PTNRS (WPZ): Free Stock Analysis
ENCANA CORP (ECA): Free Stock Analysis Report
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