The three bills

19 January 2010 By Christopher Swann

Simply by shifting gas pipeline assets from its lowmultiple parent to a higherrated subsidiary, the U.S. energy group unlocked around $1.4 billion of value. Rivals like El Paso would be wise to follow Williams lead in simplifying its structure and maximizing tax efficiencies.

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Williams, a Tulsa, Oklahomabased U.S. energy group, said it would sell the bulk of its gas pipeline assets to a subsidiary, Williams Partners LP, in a deal worth more than $12 billion in cash, stock and assumed debt.

Under the agreement, Williams Partners will acquire assets from Williams including the Transcontinental Gas Pipe Line Company, 65 percent of Northwest Pipeline, and 24.5 percent of Gulfstream Pipeline.

In exchange, the parent will receive $3.5 billion in cash and 203 million limited partnership units. Williams Partners will also take on $2 billion of debt.

Following the deal, Williams Partnership will acquire Williams Pipeline Partners – another publicly traded affiliate of Williams for stock, giving it full control of the Northwest Pipeline. Williams will own an 80 percent stake in the combined master limited partnership – a tax advantaged corporate structure.

Shares of Williams rose 8 percent to $23.15, while units in Williams Partners were up 16 percent at $35.70.

Barclays Capital and Citigroup advised Williams on the transaction.

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