North American energy firm, Williams Companies Inc. (WMB) has declared the pricing of 53 million shares of the company at $57.00 a piece. Moreover, it stated that the underwriters would be given a 30-day period to buy an additional 7.95 million shares.
This means that the company would garner around $3 billion from the offering and an extra $450 million if the underwriters make the additional purchase.
Williams Companies intends to use the net proceeds from the offering to finance 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 (ACMP).
On Jun 15, Williams Companies announced that it would increase the GP and LP interests in Access Midstream – a master limited partnership (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 (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 price rose nearly 22% over the past one week, following these positive statements.
Tulsa, OK-based Williams Companies is a premier energy infrastructure provider in North America. Despite the above-mentioned positives, we remain concerned about the company’s considerable natural gas exposure, which increases its sensitivity to the commodity’s price, which continues to be volatile.
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 (HEP) that sports a Zacks Rank #1(Strong Buy).
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