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Why Has Williams Risen 30% in Six Weeks despite a Recent Fall?

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Williams has yet another failed buyout

Williams Companies (WMB) has fallen 5.1% in the last three trading sessions following the official announcement of a withdrawal of interest by Enterprise Products Partners (EPD) to acquire WMB. This fall could be attributed to a lack of interest by Williams Companies toward EPD’s offer, as alleged by EPD.

EPD said, “We submitted non-binding proposals to Williams to combine Williams and Enterprise. As a result of rumors with respect to our proposals, as well as the lack of engagement by Williams, we have determined that there is no actionable path forward toward an agreement.”

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According to a WMB press release, “The Williams Board, including the three new directors, with the assistance of legal and financial advisors, was engaged in the process of carefully reviewing the most recent indication of interest from Enterprise. As such, Williams is surprised by today’s announcement from Enterprise. As always, the Board remains open to considering any potential strategic alternative that would maximize value for stockholders.”

WMB stock has still risen 30% over the past six weeks, driven by a few other major announcements. It might rebound in the coming days after this news is completely absorbed by investors.

Geismar Plant sale

WMB’s midstream MLP subsidiary, Williams Partners (WPZ), announced its plan to monetize its Geismar-based olefins facility. According to the related press release, the partnership “has initiated an adviser-led process to explore the monetization of its indirect ownership interest in the Geismar, Louisiana olefins plant and complex.”

The asset sale would help Williams move toward a natural gas–focused strategy. Proceeds from this transaction would be used to lower leverage and fund growth projects.

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Alan Armstrong, WMB’s CEO (chief executive officer), said, “We believe the potential monetization of this asset would create significant value for Williams Partners and our decision to explore alternatives with respect to the Geismar olefins plant is consistent with Williams’ strategy to narrow its focus and allocate capital to its strong core, natural gas-focused business.”

Other key announcements

Williams Companies’ other key announcements over the past six weeks include the following:

  • an organizational realignment
  • the appointment of three new directors to the board of directors
  • a contract restructuring with Chesapeake Energy (CHK) in the Barnett shale and the Mid-Continent region
  • a Canadian asset sale
  • distribution cuts and reinvestment plans

We’ll take a look at these announcements in relevant contexts in later parts of the series.

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