Williams Being Acquired?

[cannon_fodder]

If this follows through, it is very bad. "We will keep the jobs" is a fantastic mantra. Worked well at Dollar-Thrifty, Citgo, etc.

But, but but, we're "business friendly." How, oh how can it be MAYOR LAFORTUNE AND GOVERNOR FALLING that in the last few years we have lost FOUR cooperate headquarters in Tulsa?

Hilti
Dollar-Thrifty
Flintco
Williams


How many BILLIONS of dollars is that? But hey, thanks for the call centers and minimum wage Macy's jobs. Good trade. (I fully realize they are largely not responsible, but if they get credit for call centers, they get blame for corporate HQs).

Add those to the list:

Sinclair
Texaco
Citgo
City Services
John Zink
Parker Drilling
RAM Energy
TelEx
About 50 smaller energy companies...

Soon we can probably add Samson. Thanks KKR.

[SXSW]

I imagine ETE will still keep a large Tulsa office but it still sucks to lose a corporate HQ, especially to Texas. 

[dbacksfan 2.0]

Samson filed Chapter 11.

http://www.tulsaworld.com/business/energy/samson-resources-files-bankruptcy-as-shale-bet-sours/article_660adca0-505a-5919-9e16-5ca21fef402e.html

[cannon_fodder]

Samson filed Chapter 11.

http://www.tulsaworld.com/business/energy/samson-resources-files-bankruptcy-as-shale-bet-sours/article_660adca0-505a-5919-9e16-5ca21fef402e.html

Raise your hand if you DIDN'T see that coming. Hey, whatever happened to Meadow Hold, the company whose pretty sign we still like? Oh, that's right, KKR bought them, stripped it, and it went away.

Between 2008-2011 Samson invested $4Billion in drilling. It was valued by the WSJ between $8-10 Billion in 2011 when KKR bought most of the assets (the family kept gulf assets). The deal was leveraged with $4.5 Billion in debt and about $3 Billion in equity. KKR paid itself $100,000,000 in transaction fees from the deal and is now seeking protection on $4.5 Bil in debt.  Strange math --- but I have to think KKR is a smart enough player that they come out ahead. No way they bought in the middle of high prices and accelerating demand without foreseeing some kind of drop.

Generally, even if the target later declares bankruptcy, KKR comes out ahead. This could be one where they expected a downtown, but not as brief and not as long. But leveraging a $7bil company with $4.5bil in debt is risky.

/thread drift

[dbacksfan 2.0]

I saw something about this with Samson back in June on Bloomberg TV that there as a possibility of Ch. 11 because of the drop in prices versus the cost of shale drilling. We're actually starting to get workers from the Dakota fields looking around hear with the pending start of a LNG terminal at the port here. There have been some other developers looking to build work camps for the estimated 2000 workers needed to build the facility.

http://jordancovelng.com/

And the opposition....

http://citizensagainstlng.com/wp/category/jcep/

(sorry for the drift as well)

[DowntownDan]

It's one thing to lose headquarters to a booming energy hub like Houston, but Dallas isn't even an energy based economy anymore.  This is just getting sad.

[Dspike]

Expect most have already heard, but here's the deal:

Dallas-based Energy Transfer Equity announced Monday morning that it would buy Tulsa-based Williams Cos. in a $37.7 billion merger deal.

Energy Transfer Equity LP will pay $43.50 per share, a 4.6 percent premium to Williams' Friday closing price of $41.60. Williams' stockholders can choose shares of Energy Transfer Equity affiliate Energy Transfer Corp., cash or a combination of both....

In a statement Monday, Mike Neal, president and CEO of the Tulsa Regional Chamber, urged the community to support the merger and praised the decision to keep Williams Partners headquartered in Tulsa.

http://www.tulsaworld.com/business/williams-ete-announce-acquisition-in-billion-deal/article_9b556de8-0257-5986-9ac3-990ce8fedf74.html

[cynical]

Curiously, the media release characterizes the purchase as a "merger" when it is nothing of the sort. The board is trying to make it more palatable to Williams shareholders, I suppose. And the respite for Williams Partners, LLP, is illusory. ETE will own 60% of WP, e.g. controlling interest. Once the "merger" is complete and Williams Cos no longer exists, what would stop ETE from "merging" with Williams Partners, just as Williams Cos was going to do? What is Mike Neal talking about?

The usual rules apply. Mergers and acquisitions only make sense if the costs of the resulting larger entity are lower than the costs were for the separate entities before the closing of the transaction. Revenues never increase as a result of a merger or acquisition. It is always costs that are forced to decrease, usually through layoffs of redundant personnel and closing of surplus facilities.

Williams has a history of some pretty stupid if not corrupt decisions. Williams Communications comes to mind. My brother lost a large piece of his life savings in that fiasco. Then there was the outsourcing to IBM of key IT functions that resulted in higher costs to the company and lower performance of those functions. They ended up re-insourcing some of the outsourced departments. Smart people.

Expect most have already heard, but here's the deal:

http://www.tulsaworld.com/business/williams-ete-announce-acquisition-in-billion-deal/article_9b556de8-0257-5986-9ac3-990ce8fedf74.html

[Townsend]

What is Mike Neal talking about?

He can't exactly run down the street yelling "It's all over people!  We haven't got a prayer!"

[heironymouspasparagus]

Soooo....they turned down $53 billion in May.  But are rushing to grab $37 billion today...

I think I could have negotiated that deal a little better - don't tell the prospective buyer, "Yes, we are interested in selling, but feel you are offering way too much..."

Just sayin'....

[SXSW]

What is the main difference between Williams Cos. (WMB) and Williams Partners LP (WPZ)?  Obviously WMB is the larger entity and parent company of WPZ but how many people does each employ, do they share management/accounting or other business functions?  Just curious what having WPZ still HQ'd in Tulsa really means.  

I would be interested to see what impact ETE buying Sunoco and Southern Resources had on those companies locations in their respective cities.  That might be a harbinger of what's to come for Tulsa.  Best case scenario is just top level execs and some redundant positions move to the Dallas HQ and the bulk of operations, including the back office accountants, analysts, etc stay in Tulsa and operate Williams as an independent subsidiary, and things stay business as usual for WPZ.  The larger, more stable company is then able to actually create more jobs in Tulsa.  Again best case scenario..

[Townsend]

What is the main difference between Williams Cos. (WMB) and Williams Partners LP (WPZ)?  Obviously WMB is the larger entity and parent company of WPZ but how many people does each employ, do they share management/accounting or other business functions?  Just curious what having WPZ still HQ'd in Tulsa really means.  

I would be interested to see what impact ETE buying Sunoco and Southern Resources had on those companies locations in their respective cities.  That might be a harbinger of what's to come for Tulsa.  Best case scenario is just top level execs and some redundant positions move to the Dallas HQ and the bulk of operations, including the back office accountants, analysts, etc stay in Tulsa and operate Williams as an independent subsidiary, and things stay business as usual for WPZ.  The larger, more stable company is then able to actually create more jobs in Tulsa.  Again best case scenario..

The word I'm getting is that this is unlikely to bring a visit from the Governor or much from the Tulsa Mayor.

[swake]

The word I'm getting is that this is unlikely to bring a visit from the Governor or much from the Tulsa Mayor.

Come on, this is no proposed sidewalk in need of canceling. What do you expect? The mayor can't be everywhere.

[Townsend]

Come on, this is no proposed sidewalk in need of canceling. What do you expect? The mayor can't be everywhere.

Apparently the Governor is making a trip to Broken Arrow for some jobs announcement  (Arby's hiring or some smile).

She should show up here...maybe offer her assistance...lobbying ability...something.  Offer to let them plug into the mansion...give them one damned reason to stay in Oklahoma.

[Conan71]

Come on, this is no proposed sidewalk in need of canceling. What do you expect? The mayor can't be everywhere.

No he can't.  He's in Italy for the next 10 days.  If this involved a big box retail development, Clay Bird would be all over this.