How shall the future curator of the Transaction Line museum choose to present the collection devoted to 2015?
Most likely with a focus on the second half. Really, after getting past the Shell-BG Group display, docents will be hard-pressed to keep the visiting school kids’ attention with tales of the first six months.
Then again, there should at least be a display case depicting The Williams Cos. Inc.’s $13.8 billion takeover of Williams Partners LP, a stock-for-unit deal that pays homage to Kinder Morgan Inc.’s roll-up of 2014 by streamlining the corporate structure. It expands the big C corp’s footprint in a host of major shale plays and sets the stage for the second half of 2015.
“We upgraded [Williams Partners] in January as converging LP/GP growth rates and persistent coverage issues set company as prime restructuring candidate,” was the quick reaction from Tudor, Pickering, Holt & Co. in its daily note, mentioning that, as a single entity, Williams has reduced its total payout and can be expected to show 10% to 15% growth through 2020.“We expected company to increase leverage profile but deal comprised of all equity with 14.5% [Williams Partners] premium over 10-day average,” it added.
Williams Partners had already bolstered its portfolio with its $575 million purchase of EV Energy Partners LP’s 21% in Utica East Ohio Midstream. That deal positioned the companies for the expected sec- ond-half recovery in the acquisitions and divestitures arena.
In the month following the deal, EV Energy’s stock price shot up 32%—sweet by 2014’s standards but spectacular by 2015’s. J.P. Morgan applauded the deal for providing the proceeds for EV Energy to apply to an acquisition of E&P assets after the transaction is closed in July, even allowing for the possibility of a touch of exuberance.
That assured approach might prompt some to stop by the museum gift shop and invest in an umbrella—the kind with dollar signs flowing through a network of pipelines. It’s best to be prepared. You never know when we’ll be hit with a storm of transactions.