SUN Sunoco LP

Williams Cos. agreed to be acquired by an Energy Transfer Equity LP affiliate in a deal that values Williams at roughly $32.6 billion, expected to create one of the biggest energy companies in the world.

Under the deal, Williams holders would receive roughly $43.50 per share held, or 1.8716 shares of ETE affiliate Energy Transfer Corp. per Williams share held. If Williams holders chose to receive more than an aggregate of $6.05 billion cash, the deal would be subject to proration.

Including debt and other liabilities, the deal is valued at about $37.7 billion.

If all of Williams' stockholders elect to receive all cash or all stock, then each share of Williams common stock would receive $8 a share in cash and 1.5274 ETC common shares.

Williams holders also would be eligible to a one-time special dividend of 10 cents per share held.

The deal was approved by both companies' boards.

Energy Transfer, a Dallas-based pipeline company, had been pursuing Williams for six months before Williams spurned its unsolicited offer, valued at $48 billion or $53.1 billion including debt and other liabilities, in June. Williams said at the time that the offer significantly undervalued the company, setting the stage for a potential bidding contest.

Williams Chairman Frank T. MacInnis on Monday said that after an evaluation of the company's alternatives, the board concluded the deal with Energy Transfer is in the best interest of the company's stakeholders.

Shares of energy companies have been slammed of late amid a drop in oil prices, with Williams and Energy Transfer shares both declining more than 25% in the past three months. A downturn in commodities prices has had stronger companies across the industry—including exploration and drilling companies—eyeing rivals as potential acquisition targets.

Geographically, a deal with Williams gives Energy Transfer an expanded geographic footprint. Williams has significant fuel-moving capabilities in the northeastern U.S., while most of Energy Transfer's pipelines are located across the south and Midwest.

Williams and Energy Transfer already have a contentious history. In 2011, Energy Transfer agreed to buy pipeline operator Southern Union Co. for $4.2 billion when Williams swooped in and offered $4.9 billion. Ultimately, Energy Transfer paid $5.7 billion to win the deal.

Williams also terminated its deal to acquire pipeline affiliate Williams Partners LP, which will remain a publicly traded master limited partnership.

Energy Transfer Equity is a master limited partnership that owns the general partner and 100% of the incentive distribution rights of Energy Transfer Partners LP and Sunoco LP.

Write to Tess Stynes at tess.stynes@wsj.com

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(END) Dow Jones Newswires

September 28, 2015 08:15 ET (12:15 GMT)

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