Williams Said Seeking Control of Pipeline Firm for $3 Billion

Jun 13, 2014 7:30 pm ET

June 13 (Bloomberg) -- Williams Cos., the fourth-largest U.S. pipeline company, is in advanced talks to buy control of Access Midstream Partners LP for about $3 billion, according to people with knowledge of the matter.

Williams would buy the stake from Global Infrastructure Partners, which owns almost one-third of Access Midstream as well as half of its general partner, the people said, asking not to be identified discussing private information. An agreement could be announced as soon as next week, the people said.

The deal is intended to accelerate Williams’ growth prospects, four months after the company avoided a potential proxy fight by giving board seats to activist investors Keith Meister and Eric Mandelblatt, who had urged it to consider “strategic combinations.”

In 2012, Williams purchased about 25 percent of Tulsa, Oklahoma-based Access and half of its general partner -- called Access Midstream Partners GP LLC. The latest deal would have it buying the other 50 percent of the general partner, which manages Access’s operations, determining how it will borrow and invest, among other things, the people said.

Access, with a market capitalization of about $13.2 billion, provides oil and natural gas gathering services to Chesapeake Energy Corp., Anadarko Petroleum Corp. and other major exploration companies, according to its 2013 annual report. Its shares are up about 16 percent this year.

MLP Structure

Jack Cowell, a spokesman for Global Infrastructure Partners and Chris Callahan, a spokesman for Access Midstream, declined to comment. Tom Droege, a spokesman for Williams, didn’t immediately return a call or e-mail seeking comment.

Access is structured as a master-limited partnership, so it pays no federal income taxes as long as it pays out most of its cash to its shareholders. The stake in Access’s general partner means Williams is entitled to an increasing share of cash flow as it grows and and can collect dividends on the partnership’s common units.

In addition to its stake in the closely-held general partner, Global Infrastructure owns more than 31 percent of Access -- including Class B shares -- according to Access’s annual report.

--With assistance from Zain Shauk and Bradley Olson in Houston.