Shell gets snubbed as Barrett merges with Williams

Williams is to acquire all outstanding shares of Barrett in a transaction valued at approximately $2.8 billion.

Barrett Resources Corporation has signed a definitive merger agreement with The Williams Companies for Williams to acquire all outstanding shares of Barrett in a transaction valued at approximately $2.8 billion, including the assumption of about $300 million in debt.

The terms of the merger agreement, which was approved by both companies’ Boards of Directors, provides for Williams to promptly commence a first-step cash tender offer of $73.00 per share for 50 percent of the outstanding Barrett common stock, followed by a second-step merger with a fixed ratio of 1.767 shares of Williams common stock for each remaining share of Barrett common stock.

Based on Williams closing price on Friday, May 4, 2001, the stock portion of the transaction is valued at $73.63 per share. On this basis, the transaction has a blended value of $73.32 per share.

The transaction is valued at $1.34 per thousand cubic feet of proved gas equivalent reserves and would more than double Williams’ proved natural gas reserves, while enhancing its ability to grow its power business.

Following the closing of the transaction, Williams plans to maintain Barrett’s Denver headquarters as its principal office for Rocky Mountain exploration and production operations.

The transaction, which is contingent on approval from federal anti-trust regulators and tenders of at least 50 percent of Barrett common stock in the fully-financed, first-step tender offer, is expected to close in 60-90 days. The merger agreement also calls for a termination fee of $75.5 million and reimbursement of expenses to Williams of up to $15 million, in the event of termination.

As of April 30, 2001, Barrett had 2.1 trillion cubic feet (Tcfe) of proved natural gas equivalent reserves, while Williams had 1.2 Tcfe at year-end 2000. Barrett currently produces approximately 345 million cubic feet of gas equivalent per day (MMcfed), while Williams produces 210 MMcfed.

The significant reserves held by Barrett, would allow Williams to more than double reserves and production. Measured by reserves, Williams would become the tenth largest natural gas company in the United States.