Williams Companies, the Tulsa, Okla.-based natural gas pipeline and terminal operator with operations in Arkansas, turned down an unsolicited buyout offer valued at 64 cents per share or $48 billion, the company announced on Sunday.
Williams did not name the bidder who made a play for the interstate pipeline operator, but said the proposal was contingent on the “termination of Williams’ pending acquisition of Williams Partners.”
“With the assistance of its outside financial and legal advisors, the Williams Board carefully considered the unsolicited proposal and determined that it significantly undervalues Williams and would not deliver value commensurate with what Williams expects to achieve on a standalone basis and through other growth initiatives, including the pending acquisition of Williams Partners,” the Tulsa pipeline operator said in a statement.
Williams owns and operates interstate gas pipeline and its gathering and processing operations that span the deepwater Gulf of Mexico to the Canadian oil sands. Through its Access Midstream business unit, which was formerly owned by Chesapeake Energy, the Tulsa-based pipeline operator owns midstream assets across Arkansas’ Arkoma basin.
In May, Williams announced a deal to acquire all of the public outstanding common units of Williams Partners that it didn’t already own for $13.8 billion. That deal would consolidate Williams and its master limited partnership (MLP), Williams Partners, under one roof with an enterprise value of nearly $84 billion.
Immediately after the unsolicited bid on Sunday evening, Williams said it has retained Barclays and Lazard “to assist in its review of strategic alternatives, which could include, among other things, a merger, a sale of Williams or continuing to pursue the company’s existing operating and growth plan.”
“Our board and management team remain committed to acting in the best interests of shareholders, and in light of the unsolicited proposal, our Board believes it is in the best interest of shareholders to conduct a thorough evaluation of strategic alternatives,” said Williams President and CEO Alan Armstrong.
“We are confident in our strategic plan and the significant value that will be created through the acquisition of (Williams Partners) and our large portfolio of growth projects. At the same time, we are open minded and committed to ensuring that Williams is maximizing value for shareholders,” Armstrong added.
The $64 per share offer represents a 33% premium over Williams’ closing price of $48.34 on Friday.
More than a decade ago, Williams sold off its 54.6% stake in another MLP called Williams Energy Partners L.P. That company later changed its name to Magellan Midstream Partners, which is planning to build a pipeline and distribution system that will bring some 75,000 barrels of refined petroleum products from Fort Smith into the Little Rock market.
Like rival Kinder Morgan, Williams is now seeking to bring all of its energy assets under one corporate umbrella and stock symbol that will increase the company’s cash flow, extend cash benefits and enable a 10% to 15% dividend growth through 2020.
Last fall, Kinder Morgan completed a deal to acquire all of the outstanding stock of its former master limited partnerships — Kinder Morgan Energy Partners, L.P. (KMP), Kinder Morgan Management, LLC (KMR) and El Paso Pipeline Partners, L.P. (EPB). Today, Kinder Morgan-owned subsidiaries will have a stake in or operate nearly 80,000 miles of pipelines and 180 terminals across the U.S.