Energy Transfer will take control of pipelines and plants that handle almost a third of rising US natural gas demand.
The stock-and-cash deal will combine the companies’ pipeline and natural gas processing networks at a time when low commodity prices are testing the energy business, the companies have said.
The combined company will be the world’s fifth biggest energy company by enterprise value. The combination will create the third largest energy franchise in North America and one of the five largest global energy companies.
The companies said the deal will enable more than $US2 billion in savings per year by 2020 due to operational efficiencies, new business opportunities, and growth from planned capital projects.
Many of these savings will come from integrating the two companies’ businesses surrounding the top US petroleum and natural gas producing venues, such as the Eagle Ford and Permian Basin in Texas.
In June, Williams rejected an unsolicited offer from Energy Transfer for approximately $US53 billion, saying it undervalued the company. The company announced at the time that it was exploring strategic alternatives.
Williams Partners will retain its name and will remain a publicly traded partnership headquartered in Tulsa, Oklahoma.
Williams’ Transco system is the largest US gas pipeline system and connects the Marcellus to populous US markets. Williams has contracts underwriting at least $2.5 billion to enlarge Transco, according to the company’s May investor presentation. Its lines connect some Energy Transfer businesses.
Energy Transfer controls three other partnerships: pipeline owner Energy Transfer Partners, fuel distributor and retailer Sunoco, and Sunoco Logistics Partners, an owner of pipelines carrying crude oil and refined products.