Energy infrastructure giant Williams Companies Inc. (NYSE: WMB) and the midstream partnership it controls, Williams Partners L.P. (NYSE: WPZ), announced Wednesday morning that Williams will acquire all the 247 million outstanding common units of Williams Partners in an all-stock-for-unit transaction at a fixed exchange ratio of 1.115 Williams shares for each common unit of Williams Partners. Williams will issue 275.4 million new shares (about 27% of total shares outstanding of the combined entity) in connection with the transaction.

At Tuesday’s closing price of $50.10 per share, the new stock is valued at around $13.8 billion and represents a 14.5% premium to Williams Partners’ 10-day average closing price and a 12.6% premium to its 20-day average.

The deal is very much like the consolidation that occurred last year when Kinder Morgan Inc. (NYSE: KMI) acquired all the outstanding equity in Kinder Morgan Energy Partners, Kinder Morgan Management and El Paso Pipeline Partners and rolled the works into a C-corporation.

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Like the Kinder Morgan deal, Williams said that the proposed transaction is taxable to Williams Partners shareholders and Williams will receive tax benefits from the asset step-up to be realized over a 15-year period. Because the MLP structure allows unitholders to defer tax payments on the quarterly distributions until the holder sells the unit or dies, the proposed exchange means Williams Partners’ unitholders may get a tax bill for all those accumulated taxes that could have been deferred.

The transaction is expected to close in the third quarter of this year.

Williams said that the combined entity expects 10% to 15% annual dividend growth through 2020 and that the new company is expected to generate $5.4 billion in adjusted EBITDA in 2016, rising to $6.8 billion in 2018. The combined entity expects to pay a third-quarter dividend of $0.64 per share, or $2.56 per share on an annual basis, up 6.7% over Williams’ previously planned third-quarter dividend of $0.60 per share. Dividends for 2016 are expected to total $2.85 per share, about 20% above Williams’ previously guided 2015 dividend and 6.3% above its previously guided 2016 dividend.

Williams Partners common units traded up about 22% at $57.75 early Wednesday morning, in a 52-week range of $44.87 to $62.95.

Williams Companies shares traded up about 5.7%, at $53.01 in a 52-week range of $40.07 to $59.77.

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