• 4 minutes Pompeo: Aramco Attacks Are An "Act Of War" By Iran
  • 7 minutes Who Really Benefits From The "Iran Attacked Saudi Arabia" Narrative?
  • 11 minutes Trump Will Win In 2020
  • 15 minutes Experts review Saudi damage photos. Say Said is need to do a lot of explaining.
  • 3 mins Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 6 hours Hong Kong protesters appeal to Trump for support.
  • 4 hours Millennials: A boil on the butt of the work ethic
  • 5 hours A little something for all you Offshore swabbies
  • 18 hours Iran Vows Major War Even If US Conducts "Limited Strikes"
  • 13 hours Ban Fracking? What in the World Are Democrats Thinking?
  • 16 hours Europe: The Cracks Are Beginning To Show
  • 25 mins When Trying To Be Objective About Ethanol, Don't Include Big Oil Lies To Balance The Argument
  • 4 hours Memorize date 05/15/2018 cause Huawei ban is the most important single event in world history after 9/11/2001.
  • 37 mins LA Times: Vote Trump out in 2020 to Prevent Climate Apocalypse
  • 3 hours Saudi State-of-Art Defense System looking the wrong way. MBS must fire Defense Minister. Oh, MBS is Defense Minister. Forget about it.
  • 6 hours US and China are already in a full economic war and this battle for global hegemony is a little bit frightening
  • 4 hours Shale profitability
  • 13 hours Let's shut down dissent like The Conversation in Australia

Pipeline Giants Merger Still Possible After First Bid Fails

The Williams Companies may have rejected a $53.1 billion buyout bid from Energy Transfer Equity [ETE], but the potential buyer’s boss says this is just the beginning of the effort to merge the two fuel transport giants.

“I believe that a combination of Williams’ assets with ETE will create substantial value that would not be realized otherwise,” Kelcey Warren, the CEO of Dallas-based ETE, said in a statement. “I am truly excited at the prospect of bringing together these two businesses under a common platform and creating additional value for every stakeholder.”

Warren said a merger would greatly enhance the new company’s cash flow, creditworthiness and growth flexibility, and that the current shareholders in Williams would immediately enjoy higher dividends.

Related: Growing India Becomes Major LNG Player

Alan Armstrong, the CEO of Tulsa-based Williams, countered in a statement that ETE’s offer “significantly undervalues” the company. “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.”

Williams announced its rejection of the ETE bid on June 21, without disclosing which company was interested in buying it. In fact, ETE had been pursuing Williams quietly for months, and only after the rejection announcement did ETE identify itself as the suitor, though it added that it was “disappointed” that it couldn’t continue the negotiations out of the public eye.

Related: Why A U.S Shale Slowdown Will Hardly Affect Oil Prices

Why? A public pursuit “will certainly make it more contentious,” Jeff Schmidt, the associate of equity research for Tudor Pickering Holt & Co. of Houston, told the Dallas Business Journal. “That’s my gut instinct.”

And Ethan Bellamy, an analyst at the financial services company Robert W. Baird, said the leadership at Williams believes the company may be able to get a better offer from a rival of ETE, such as the Houston-based energy company Kinder Morgan, just as Armstrong's statement indicated.

“Williams board members know that they have a strong asset base, a good growth plan and good management,” Bellamy said. “Williams shareholders should go for the best deal from the highest bidder, not necessarily this one, though that might end up being the case.”

Related: 2015 Could Be The Year Of Peak Oil

Some analysts say the ETE offer for Williams is a prime example of expected consolidation in the business of transferring fuels such as gas and oil. Companies that operate pipelines have largely been spared the pain of the sharp decline of oil prices during the past year, but many observers say enlarging their operations through mergers would be profitable regardless of the price of oil.

One of those is Williams, who built up ETE into a fuel transportation giant over the years by moving both gas and oil through a pipeline network totaling about 71,000 miles. He also beat out Williams in a bidding war for Southern Union Co. at a total cost of $5.7 billion.

And now he wants to buy out his biggest competitor altogether.

By Andy Tully Of Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play