June 22’s MLP Losers: Williams Partners and Energy Transfer Equity

Williams Partners (WPZ) shares tanked by 7.6% yesterday apparently due to the rejection of Energy Transfer Equity’s (ETE) $53.1 billion merger proposal to acquire Williams Companies (WMB). WMB holds the GP (general partner) of WPZ. The proposal was said to be contingent on the termination of WMB’s pending acquisition of WPZ. WMB and WPZ signed a definitive agreement on May 13, 2015, under which Williams was expected to acquire all of WPZ’s public outstanding common units.

According to WPB’s management, ETE’s $64.00-per-share price offer undervalues Williams. WMB’s board has started looking for strategic alternatives such as merger, the sale of Williams, or a continuation of the company’s existing operating and growth plan.

Energy Transfer Equity (ETE) fell by 4.9% also owing to the fallout of the merger proposal mentioned above. ETE has made multiple offers over an almost six-month period, including the latest offer sent to Williams’ Board of Directors on June 18, 2015. ETE’s limited partner, Energy Transfer Partners (ETP), fell 1.8%. ETE’s earnings depend on distributions from ETP. For a detailed overview of Energy Transfer Group’s current organization structure, refer to Energy Transfer Partners Was One of the Strongest MLPs in 2014.

Other midstream losers on June 22 include Targa Resources Partners (NGLS) and NGL Energy Partners (NGL). NGLS lost 2.2% while NGL, which rose 4.9% of Friday, lost 2.0% in the last trading session. This loss could be because of traders booking profits. NGL has returned an impressive 17.8% year-to-date to its investors just through price appreciation.

The Alerian MLP ETF (AMLP), which comprises of 25 midstream MLPs, has returned -8% year-to-date. WPZ, ETP, NGL, and NGLS together make up ~21.3% of AMLP.