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Shareholders OK Williams Cos. merger with Williams Partners.

Byline: Brian Brus

TULSA Williams Cos. shareholderson Thursdayapproved the mergerwith Williams Partners LP. The transaction is valued at about $10.5 billion and will effectively unwind the master limited partnership.

The decision to purchase the remaining shares of Williams Partners that the Tulsa-based company did not already own was not a surprise. It passed with the nearly unanimous support of more than 99 percent of the votes backed by Williams Cos. shares. The vote represented about 82 percent of Williams' total outstanding shares as of July 9.

The merger is subject to customary closing conditions and is expected to close on Friday. Effective Aug. 13, Williams Partners common units will no longer be publicly traded on the New York Stock Exchange.

In May, the natural gas pipeline operator Williams Cos. typically referred to simply as Williams and traded on the stock exchange as WMB announced it would buy outstanding shares of Williams Partners (WPZ) to create a combined company valued at $10.5 billion. Williams already owns three-quarters of Williams Partners.

That decision followed revisions by the Federal Energy Regulatory Commission related to income tax treatment of interstate oil and gas master limited partnerships, or MLPs. The merger and stock issuance effectively unravel the partnership structure.

Executives announced in Maythey would issue 382.5 million shares to purchase the remaining Williams Partners units Williams Cos. did not already own. Shareholders also approvedon Thursdaythe issuance of the shares in connection with the merger.

Williams Partners is a large-cap, natural gas, master limited partnership with operations that include gathering, processing and interstate transportation of natural gas and natural gas liquids. With major positions in top U.S. supply basins, Williams Partners owns and operates more than 33,000 miles of pipelines systemwide. Much of the company's original assets were built by oil and gas driller Chesapeake Energy Corp. Chesapeake spun out its pipeline division in 2012 and eventually Williams Cos. purchased a majority stake in the master limited partnership.

The deal included the mergerof a subsidiary,SCMS LLC, which was formed in 2015 solely for the purpose of consummating the merger with Williams Partners and has no operating assets, according to the U.S. Securities and Exchange Commission records.

For the quarter ended June 30, Williams Cos. saw its income boosted in part due to higher margins on natural gas liquids transported for customers and higher service revenues. WMB reported net income for the second quarter of $135 million, 66 percent higher than net income of $81 million for the same period in 2017. Per-share net income was 16 cents for the period, compared to 10 cents per share in the second quarter of the previous year.

In the same period, Williams Partners reported higher net income of $426 million, or 44 cents per common unit, up 33 percent from net income of $320 million, or 33 cents per common unit, for the same period in 2017.

Traders reacted positively to the news Thursday with slight increases in stock prices. Williams shares closed at $31.79 by the end of the business day, an increase of 24 cents. Williams Partners shares closed at $47.55, an increase of 41 cents.

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Publication:Journal Record (Oklahoma City, OK)
Date:Aug 9, 2018
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