Williams Rebuffs $48 Billion Bid From Magnate Kelcy Warren

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Alan Armstrong
Williams Partners GP LLC president and CEO Alan Armstrong. Photographer: F. Carter Smith/Bloomberg

Williams Cos. rejected a takeover offer from pipeline magnate Kelcy Warren that aims to derail a consolidation of the North American natural gas and oil hauler, according to people familiar with the deal.

Williams hired banks to explore alternatives to the $48 billion offer, according to a statement on Sunday that didn’t identify the bidder. The approach was from Warren’s Energy Transfer Equity LP, according to the people, who asked not to be named because the information is private.

The $64-a-share bid “significantly undervalues Williams and would not deliver value commensurate with what Williams expects to achieve on a standalone basis,” according to a statement from the company. A spokesman from Williams declined to comment, while a representative of Energy Transfer didn’t return calls seeking comment.

Should a deal be done it would rank near the largest in the pipeline industry. The biggest so far is Kinder Morgan Inc.’s consolidation of its partnership assets last year that was valued at $48.9 billion when announced, according to data compiled by Bloomberg.

The Energy Transfer offer depended on Williams abandoning its own pending $14 billion purchase of the units it doesn’t already own in Williams Partners LP that feeds gas and crude from wells to larger pipeline systems.

Williams hired Barclays Plc and Lazard Ltd. to assist in its review of strategic alternatives, including a potential merger, sale of the company or continued pursuit of the existing operating and growth plan.

Alternatives

“Our board believes it is in the best interest of shareholders to conduct a thorough evaluation of strategic alternatives,” Alan Armstrong, chief executive officer of Williams, said in the statement.

Williams Cos. has increased 7.6 percent since the end of 2014, on track for its seventh consecutive annual gain, to $48.34. Energy Transfer Equity, this year’s second-best performer in the Alerian Energy Infrastructure Index, has risen 19 percent this year.

Williams Partners climbed 12 percent since the parent company announced its takeover plans last month. The consolidation would allow Williams Cos. to increase dividends, lower borrowing costs and steer more cash into expansion projects.

Warren, a 59-year-old University of Texas-trained engineer, began building a pipeline empire in the 1990s that is now large enough to circle the earth’s equator almost three times. With a net worth estimated at $7.2 billion, he is the 66th richest American, according to data compiled by Bloomberg.

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