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Williams Cheap Target for Pipeline After El Paso Deal: Real M&A

Kinder Morgan Inc.’s takeover of El Paso Corp. at the highest premium for a U.S. pipeline operator in 15 years is turning Williams Cos. into the industry’s cheapest takeover target.

Williams, the Tulsa, Oklahoma-based pipeline owner pursuing a separation of its oil and natural-gas exploration unit, yesterday was valued at 7.5 times earnings before interest, taxes, depreciation and amortization, the lowest multiple of any U.S. pipeline company, according to data compiled by Bloomberg. That’s almost half the 14 times Ebitda Kinder Morgan said this week it’s paying for El Paso in a $38 billion purchase that will create the biggest U.S. pipeline operator. The 47 percent premium is the industry’s richest since 1996, the data show.