Williams Lands Barrett

Valero Energy Corp. and Ultramar Diamond Shamrock Corp. weren't the only two oil companies making merger news today as Williams Cos. Inc. agreed to buy oil and natural gas company Barrett Resources Corp. for approximately $2.5 billion in cash and stock, trumping a hostile $2 billion bid made by Royal Dutch/Shell Group last week.

The agreement calls for Williams to immediately commence a cash tender offer to acquire 50 percent of Barrett's outstanding stock for $73 per share. Each remaining Barrett share would then be swapped for 1.767 shares of Williams. Williams would also assume about $300 million in Barrett debt, according to Reuters.

Barrett has been seeking a friendly merger since March, when Shell launched a hostile bid valuing the company at $55 per share. Shell raised its offer to $60 per share last week, but Barrett again rejected it.

The merger agreement with Williams calls for a termination fee of $75.5 million and reimbursement of expenses to Williams of up to $15 million if Barrett pulls out of the deal.

The deal, which is expected to close within the next 90 days, is still pending Federal Trade Commission approval.

Williams said it plans to keep most of Barrett's 237 employees and maintain Barrett's Denver headquarters for the company's Rocky Mountain exploration and production operations.
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