Market Overview

Williams Partners Completes Acquisition of Williams' Gulf Olefins Business

Williams Partners (NYSE: WPZ) today announced that it has completed the transaction to acquire Williams' (NYSE: WMB) approximately 83-percent undivided interest in the Geismar olefins production facility, as well as Williams' refinery-grade propylene splitter for $2.264 billion and pipelines in the Gulf region, for $100 million. Additionally, Williams Partners will be responsible for the completion of the ongoing expansion of the Geismar facility projected to cost $270 million and additional pipelines projected to cost approximately $160 million.

The addition of olefins production to Williams Partners' business is expected to bring more certainty to cash flows that were previously exposed to the market for ethane, which is projected to experience periods of volatility as feedstock demand for infrastructure lags new supplies from shale-gas production. North American ethylene demand is expected to remain strong, given its continuing advantaged cost, compared with ethylene derived from crude-oil based feedstock.

Williams Partners expects that the addition of olefins production to its business via this acquisition will be accretive to distributable cash flow, on a per-unit basis for the partnership's unitholders. Williams Partners funded the acquisition with the issuance to Williams of 42.8 million Williams Partners limited-partner units, $25 million in cash and an increase to the general partner's capital account to maintain Williams' 2-percent general-partner interest.

Williams gains increased distributions from Williams Partners for the limited-partner units it received as consideration for the transaction. The increased distributions from Williams Partners support Williams' dividend growth strategy.

Williams owns approximately 70 percent of Williams Partners, including the general-partner interest.

Posted-In: News M&A

 

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