Zacks_Analysts' Blog : WPZ-WMZ Merger Wrapped Up - Analyst Blog

Williams Companies Inc. (WMB) units, namely, Williams Pipeline Partners LP (WMZ) and Williams Partners LP (WPZ), announced the completion of their merger as announced on May 24, 2010.

 

The merger was immediately effective following a special meeting of the Williams Pipeline Partners limited on August 31. Under the terms of the agreement, each holder of Williams Pipeline will receive 0.7584 unit of Williams Partners. The merged entity will trade under the symbol "WPZ" and Williams Pipeline Partners will be delisted.

 

At the beginning of this year, the parent company, Williams Companies, had undertaken a restructuring plan in its pipeline and processing operations to speed up its growth by generating greater cash flow. Consequently, Williams Companies announced plans to contribute essentially all of its midstream and natural gas pipeline assets valued at approximately $12 billion to Williams Partners. The completion of the merger marks the concluding step in the restructuring plan, which should foster growth and enhance long-term shareholder value.



The merger also creates one of the biggest natural gas partnerships in the U.S. and facilitates the parent company with additional capital for natural gas exploration. Williams Partners, on the other side, will control midstream operations.



Tulsa, Oklahoma-based Williams Partners is involved in gathering, transporting and processing of natural gas, as well as fractionating and storing of natural gas liquids. Williams Companies owns approximately 80% of Williams Partners, including the general-partner interest.



In the long run, the partnership’s distribution growth potential is likely to improve owing to the sizeable portfolio of organic expansion projects around its midstream and pipeline assets. We believe that the distribution growth prospect will smoothen further, with the help of lower cost of capital and significant backlog.