Williams To Shell Out Special Dividend Upon Merger With ETE

The board of directors of energy infrastructure provider Williams Companies Inc. (NYSE:WMB) has offered a special dividend of 10 cents per share. But the catch is that the dividend will only be paid if and only if Williams merges with its rival Energy Transfer Equity LP (NYSE:ETE) .

It is to be noted that Williams’ shareholders will vote for the pending merger on Jun 27. Under the current terms, the merger will fall though if it is not closed by Jun 28, 2016.

The special dividend is likely payable to shareholders of record as of the close of the last business day prior to the consummation of the probable merger. Moreover, the shareholders will have to hold the stock until the completion of the merger. Investors should know that the special dividend is anticipated to be paid as early as possible following the closure.

In a separate development, Williams projected that if the merger gets closed, the financial benefit or the synergies will be way lower than what was thought last September when Williams agreed to being acquired by Energy Transfer Equity. The company expects the synergies to be $126 million every year by 2020, almost 94% below the prior anticipation of more than $2 billion. The company added that even if the market sees the levels seen in Jul 2015 – when both Williams and Energy Transfer Equity were in early talks to enter into a merger deal – the value of the synergies would be 543 million instead of $2 billion anticipated earlier.

WILLIAMS COS Price

Tulsa, OK-based Williams is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing, and transportation of natural gas.

Currently, the company carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months. Williams’ rival Energy Transfer Equity also has a Zacks Rank #3.

Some better-ranked players in the oil production/pipeline industry include Enbridge Inc. (NYSE:ENB) and NuStar GP Holdings, LLC (NYSE:NSH) . Enbridge sports a Zacks Rank #1 (Strong Buy) while NuStar carries a Zacks Rank #2 (Buy).