Energy Transfer acquires pipeline firm Williams Co. for $37.7 billion

DALLAS – Dallas billionaire Kelcy Warren has closed a deal to acquire pipeline company Williams Co., ending a lengthy pursuit that initially drew opposition from management at the rival firm.

In a deal announced early Monday, Warren’s Energy Transfer Equity will pay $37.7 billion in a combination of cash and stock to bring together two of the country’s largest pipeline companies.

The move is in the latest of a string of deals from Warren, who has proved himself an aggressive deal maker in recent years, acquiring Sunoco and Southern Union in 2012 and then Susser Holdings, which owns the Stripes gas station chain, last year.

The dramatic fall in crude prices since last summer, the result of a surge in U.S. oil production and uncertainty in the global economy, has only sparked his interest.

“You try to guess the bottom, and you’re always wrong. So you buy a little before or a little after. We believe the time is now. In the next year they’re going to be some great opportunities,” Warren said in an interview last week.

Under the terms of the deal, Energy Transfer will pay $43.50 for each share of Williams, an almost $2 premium to Williams’ closing price Friday. More critically, Energy Transfer is willing to put more than $6 billion in cash into the deal.

Warren’s interest in the Tulsa, Okla.-based Williams first came into public view in June when management there fought back Warren’s initial all-stock offer for the company.

But on Monday, Williams’ executives said after “extensive discussions with other parties” they concluded the deal with Warren was in shareholders’ best interests.

“As a combined company, we will have enhanced prospects for growth, be better able to connect our customers to more diverse markets, and have more stability in an environment of low commodity prices,” Williams CEO Alan Armstrong said in a statement Monday.

Williams, with more than 30,000 miles of pipeline, offers Energy Transfer the chance to expand its business moving natural gas around the country, along with the opportunity to move into the Western United States and Canada, where oil sands have become a large new source of crude.

With more than 70,000 miles of pipeline, Energy Transfer already controls a large block of the energy supply from Texas to the Midwest and Northeast.

Combining with Williams would “vault (Energy Transfer) into a league of its own in terms of midstream size,” a report by Bank of America Merrill Lynch this summer read.

Under the deal, Williams would keep its own name and headquarters, along with a “meaningful ongoing presence” in Tulsa, a statement from Energy Transfer said.