Williams to acquire Williams Partners following FERC policy reversal

Williams Cos. Inc. has agreed to acquire Williams Partners LP in an all stock-for-unit transaction valued at $10.5 billion.

The companies decided to merge following the US Federal Energy Regulatory Commission’s Mar. 15 reversal of its 2005 income tax policy that permitted master limited partnership interstate oil and natural gas pipelines to maintain an income tax allowance in cost-of-service rates.

Under the agreement, Williams will acquire all 256 million public outstanding units of Williams Partners at a fixed exchange ratio of 1.494 Williams shares for each public unit of Williams Partners. Assuming a 1.494 exchange ratio, Williams will issue 382.5 million shares, representing 31.6% of the total shares outstanding of the combined entity.

The merger is expected to close in the fall subject to standard closing conditions and shareholder approval at which time Williams Partners will become a wholly owned subsidiary of Williams.