Source: Williams Partners
Williams Partners L.P. (NYSE: WPZ) agreed to acquire an additional 24.5-percent interest in the Gulfstream interstate gas pipeline system from Williams (NYSE: WMB) for $330 million. The acquisition will increase Williams Partners' ownership interest in Gulfstream to 49 percent and reduce Williams' direct ownership interest to 1 percent.
Williams Partners' total consideration for the assets will include $297 million in cash and $33 million in WPZ limited-partner and general-partner units.
Williams Partners plans to fund the cash portion of the acquisition, which is expected to close next month, with its revolving credit facility. The transaction is expected to be immediately accretive to distributable cash flow for Williams Partners, on a per-unit basis for the partnership's unitholders.
Gulfstream is a 745-mile interstate gas pipeline system that extends from the Mobile Bay area to markets in Florida. Spectra Energy Corporation and its subsidiaries own the additional 50-percent interest.
Williams Partners expects the increased ownership interest in Gulfstream will generate approximately $20 million in additional segment profit for its gas pipeline business in 2011 and approximately $30 million in 2012. Both Williams Partners and Williams are providing a full update to 2011-12 earnings and capital expenditure guidance in their first-quarter 2011 financial results, which are being released after market on Wednesday, May 4.
The board of directors of the general partner of Williams Partners approved the transaction based upon a recommendation from its conflicts committee. The conflicts committee, which is comprised entirely of independent directors, retained independent legal and financial advisors to assist it in evaluating and negotiating the transaction.