The board of directors of Williams Companies Inc.WMB will likely meet this week to discuss its sale to its rival and natural gas pipeline operator Energy Transfer Equity ETE , going by Reuters. Williams' decision came after Energy Transfer Equity revised its buyout offer.
Last June, Williams Companies had declined an unsolicited buyout offer, worth $48 billion, made by Energy Transfer Equity. The proposal involved an all-equity deal of $64 per Williams Companies' share, a 32% premium to the closing price of $48.34 on Friday, Jun 19. But now, as per the report, Energy Transfer Equity has revised the previous buyout proposal and agreed to pay roughly 15% of the transaction in cash. It is to be noted that although a rough figure of the cash amount is given, the accurate amount is on the anvil.
Reuters added that initially the boards of Williams Companies will meet to decide whether they will at all join Energy Transfer Equity at the final negotiation table. If that is decided, the board will meet again for the deal approval.
Tulsa, OK-based Williams Companies is a premier energy infrastructure provider in North America. The company's core operations include finding, producing, gathering, processing and transportation of natural gas. Boasting a widespread pipeline system, Williams is one of the largest domestic transporters of natural gas by volume.
Williams Companies' midstream assets, which are less sensitive to commodity prices, help it to maintain a steady stream of revenues and cash flow even if natural gas prices stay low. We appreciate the company's recently enhanced natural gas delivery capacity to Brooklyn and Queens by bringing its Rockaway Delivery Lateral and Northeast Connector projects online. This reflects Williams Companies' objective to meet the long-term clean energy needs of New York City.
However, the ongoing weakness in commodity prices has taken its toll on the volumes and distribution growth potential of Williams Partners WPZ , the company's largest income generating business segment.
As a result, Williams Companies carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, a better-ranked player in the energy sector is Tesoro Corporation TSO , which sports a Zacks Rank #1 (Strong Buy).