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Williams Companies Inc. (NYSE: WMB) agreed to pay $5.995 billion in cash to expand its ownership of Access Midstream Partners LP (NYSE: ACMP), a move aimed at increasing the energy company's presence in major shale regions. Williams is buying the remaining 50% of the privately held general-partner interest in Access Midstream that it didn't already own, as well as 55.1 million limited partner units. The move gives Williams a market value of around $36.9 billion. Williams is buying the stakes from Global Infrastructure Partners II. The purchase makes Williams one of the biggest U.S. transporters of oil and natural gas and an "industry-leading, large scale limited partnership."
"We expect the acquisition to deliver immediate and future dividend growth for Williams' shareholders and to further enhance our presence in attractive growth basins," Chief Executive Officer Alan Armstrong said in a statement. "In addition, we expect the acquisition of Access Midstream Partners will fortify Williams' stable, fee-based business model and support our industry-leading dividend growth strategy."
The deal is expected to close in Q3, after which Williams plans to boost its dividend 32% to $0.56 per share. Jefferies upgraded Williams to "Buy" from "Hold" and raised its price target to $65 following the news. WMB shares climbed roughly 25% to a 52-week high of $59.68 intraday. Meanwhile, Credit Suisse hiked its prices target on Access Midstream to $75 from $67. ACMP shares rose a more modest 1%, but still good enough for a 52-week high of $65.88.