Williams Companies Prices $1.9B Notes to Fund Acquisition - Analyst Blog

Soon after announcing a 53 million share offering to fund its recent acquisition, Williams Companies Inc. (NYSE: WMB) has declared pricing of $1.9 billion senior notes for the same.

The North American energy firm announced a two-part offering. The first part comprises a $1.25 billion offering of 10-year notes, priced at 99.738% of par and carrying an interest rate of 4.55%. The second offering of $650 million 30-year notes is priced at 99.773% of par and carries an interest of 5.75%. Williams Companies anticipates these offerings to close on Jun 24.
 
The company plans to use the net proceeds from the offering to fund a part of its recently announced $6 billion acquisition of the 50% general partner (GP) interest and 55.1 million limited partner (LP) units in Access Midstream Partners LP (NYSE: ACMP).  

On Jun 15, Williams Companies announced that it would increase the GP and LP interests in Access Midstream – a master limited partnership (NYSE: MLP) engaged in the midstream business – to 100% and 50%, respectively, by the third quarter. Williams Companies also stated that it intends to merge the energy infrastructure provider, Williams Partners LP (NYSE: WPZ) with Access Midstream.

Furthermore, Williams Companies mentioned that the benefits from the acquisition would be reflected in its third-quarter dividend, which is expected to increase 32.0% to 56 cents per share. Notably, the stock has gained nearly 24% since the acquisition.

Tulsa, OK-based Williams Companies is a premier energy infrastructure provider in North America. At present, Williams Companies carries a Zacks Rank #3 (Hold), which implies that it is expected to perform in line with the broader U.S. market in the next one to three months.

Meanwhile, one can consider a better-ranked player from the same industry such as Holly Energy Partners L.P (NYSE: HEP) that sports a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
WILLIAMS COS (NYSE: WMB): Free Stock Analysis Report
 
WILLIAMS PTNRS (NYSE: WPZ): Free Stock Analysis Report
 
ACCESS MIDSTRM (NYSE: ACMP): Free Stock Analysis Report
 
HOLLY EGY PTNRS (NYSE: HEP): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research