Following a string of mergers and consolidations that analysts have predicted in recent months, The Williams Cos. Inc., Williams Partners LP and Access Midstream Partners LP have announced the details of their own merger agreement.

According to the terms of the agreement, the MLPs will merge in a unit-for-unit exchange at a ratio of 0.86672 Access common units per Williams Midstream common unit held by the MLP unitholders.

Prior to completion of the merger, which was originally announced in June, Access will create a subdivision of its common units and each public unitholder of Access will receive 0.06152 additional Access common units for each Access common unit they hold. In aggregate, the public unitholders of Access will receive about 6.3 million new Access common units worth about $281 million, or about $3.74 per public Access common unit.

Williams, prior to the merger, will hold about 306.4 million Williams common units and about 101.8 million Access common units.

Upon completion of the merger, Williams is expected to hold about 353.3 million Access common units, representing about 58.8% of the limited partner interest in the merged MLP.

Williams will continue to own 100% of the general partner interested and related incentive distribution rights and will continue to control the merged MLP.

“This is another big step toward our goal of becoming the leading natural gas infrastructure provider in North America,” Williams’ CEO Alan Armstrong said in a statement. “The combination of Access Midstream Partners’ intense focus on natural gas gathering with Williams Partners’ broader service offerings along the value chain is yielding even more robust growth opportunities. Additionally, the people at both partnerships bring valuable skills, experiences and best practices that will strengthen the combined partnership’s ability to execute and grow. This transaction advances our strategy to connect the best supplies to the best markets by allowing us to provide even more service and market options for our customers."

The merger is expected to close by early 2015, and the company expects the newly formed MLP will be one of the largest and fastest-growing MLPs with the expected 2015 adjusted EBITDA worth about $5 billion with an industry leading 10% to 12% unit distribution growth rate through 2017.

Cash distributions for 2015 are expected to total $3.65 per limited partner unit, up 50% and 30% over Access’ 2014 and 2015 distribution guidance, respectively. The merged MLP expects to pay a regular cash distribution in first-quarter 2015 in the amount of 85 cents per unit, up 53% over the Access’ distribution paid in the first quarter of the prior year, according to the statement.

“Both Access and Williams Partners are experiencing robust growth, and this growth will benefit both our customers and our employees,” said Access’ CEO Mike Stice. “We expect customers to benefit from the expanded organizational capability and enhanced national scale that the combined business provides. We’re already seeing employees benefit from opportunities for advancement and from the additional benefits of being a member of the larger Williams family.”

The merged MLP will feature large-scale positions across three key components of the midstream sector, including gas pipelines, gathering and processing and NGL and petrochemical services, including:

  • The Transco, Northwest and Gulfstream gas pipelines;
  • Large-scale positions in growing natural gas supply areas in major shale and unconventional producing areas, including the Marcellus, Utica, Piceance, Four Corners, Wyoming, Eagle Ford, Haynesville, Barnett, Midcontinent and Niobrara. Additionally, the merged MLP’s business would include oil and natural gas gathering services in the deepwater Gulf of Mexico; and
  • NGL and petrochemical services on the Gulf Coast and in western Canada provides differentiated long-term growth.

The merged MLP will be named Williams Partners LP and it will be based in Tulsa with major offices in Oklahoma City, Houston, Pittsburgh, Salt Lake City and Calgary.

Pure play

Williams intends to complete its transition to a pure-play general partner holding company and drop down its remaining NGL and petrochemical services assets and projects by late 2014 or early 2015. The company anticipates investing about $600 million in the dropdown assets by year-end 2014. The dropdown will be subject to committee analysis and approval.

Williams was advised in this transaction by UBS Investment Bank, Barclays, Citi and Gibson Dunn. The conflicts committee was advised by Robert W. Baird & Co. Inc. and Baker Botts LLP. The Access conflicts committee was advised by Evercore and Richards, Layton & Finger. Access was advised by Latham & Watkins.

At the helm
J. Mike Stice is expected to continue as a director of the general partner of the merged MLP. Stice, who currently serves as Access’ CEO, will retire as an officer of the company upon the closing of the merger.

Robert S. Purgason, current COO of the general partner of Access, is expected to join Williams as senior vice president overseeing the Access operations. Purgason will report directly to Williams’ president and CEO Alan Armstrong. When the merger is complete, it is expected that Purgason also will serve the merged MLP as one of its general partner’s senior vice presidents, rather than as its COO, according to a statement from Williams.

David C. Shiels, currently CFO of the general partner of Access, will leave the company to pursue other opportunities after the merger closes. He will continue in his current role until the merger is complete.

Upon the closing of the merger, it is expected that Alan Armstrong and Donald Chappel will serve the merged MLP as its general partner’s CEO and CFO, respectively. Chappel currently serves as CFO of Williams and Williams Partners.

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