One part of the rejected $53 billion offer for Williams Companies Inc. (NYSE: WMB) from natural gas pipeline MLP Energy Transfer Equity L.P. (NYSE: ETE) that may turn out worse for investors than the rejection itself is the fate of Williams Partners L.P. (NYSE: WPZ), the MLP that Williams controls and has offered to buy completely for about $13.8 billion in parent company stock.

Energy Transfer’s offer explicitly required the termination of Williams’s (WMB) bid to acquire its midstream partner, and shares of Williams Partners (WPZ) have dropped more than 6% in Monday trading. It is difficult to see how any bid for WMB will permit the deal for WPZ to go through.

The WMB offer for WPZ adds about $11 billion in long-term debt to any deal, and if WMB wants to remain independent all it has to do is complete the deal for Williams Partners. No buyer will surface for quite some time.

So what else could happen to Williams Partners? The obvious answer is that it gets picked up by another MLP. The question remains, “At what price?” Very likely not the $57 or so per share price implied in the offer from WMB. The only buyers left for WPZ will be midstream MLPs looking to expand.

Remember, too, that pipeline MLPs must grow or die. One report indicated that WMB might be trying to tease out a bid for WPZ out of Kinder Morgan Inc. (NYSE: KMI) or some other huge pipeline company. Among WPZ’s assets is the 10,500-mile Transco pipeline system that hauls natural gas from the Gulf Coast region to Northeastern and Southeastern states. WPZ also has pipeline and gathering assets in the Eagle Ford and Marcellus shale plays, among others. These are valuable assets and WMB may not be able to get maximum value for WPZ if other potential acquirers take the same position as Energy Transfer.

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That is probably why WPZ stock dropped 7.6% on Monday to close at $49.10, in a 52-week range of $44.87 to $62.95. The consensus price target on the stock is $55.

WMB stock closed up nearly 26% on Monday at $60.86, after posting a new 52-week high of $61.38. The 52-week low is $40.07.

Energy Transfer started out with a gain on Monday, but shares closed the day down nearly 5% at $65.06, in a 52-week range of $45.88 to $70.88.

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