Let’s put on our deerstalkers, light pipes and attempt to solve a whodunit by means of Sherlock Holmesian deduction.

How was it that Reuters and Financial Times learned nearly simultaneously last week that Enterprise Products Partners (NYSE: EPD) had approached Williams (NYSE: WMB) about a merger?

Were the press leaks the work of entrenched Williams management that submitted to an earlier proposal by Energy Transfer Equity (NYSE: ETE) against its will, only to be left standing at the altar? Seems doubtful. This party had nothing to gain from reporting interest it reportedly rejected.

Was the gossip spread by one of the six Williams directors who resigned shortly before Enterprise made its move? If this crowd had heard of the approach we likely would have too, considerably earlier.

That leaves Enterprise and/or its investment bankers. Ergo, Enterprise very likely still has interest in acquiring Williams at some price. We can now doff period headwear; this detective stuff is easy.

The more pertinent question, though, is, at what price? If the reports that Enterprise made its approach in early July are accurate, it did so with Williams stock trading near $20. When Williams cut its dividend early this month to meet capital spending needs without jeopardizing the credit rating, the stock promptly hit $25. Now it’s near $28 on rekindled merger hopes, roughly 40% higher than when that spark was struck.  

Which doesn’t seem like a great starting point for renewed merger talks, whether with incumbent management (don’t hold your breath) or the new leadership hedge fund activists hope to install after winning control of the board at the annual meeting in November.

With the market discount on the stock largely gone as a result of merger speculation this seemed like a great time to cash in some chips, which is why we cut out notional exposure to WMB in half in the most recent monthly issue. Meanwhile, Williams’ operating affiliate Williams Partners (NYSE: WPZ) hasn’t been much affected by the  speculation and continues to yield more than 9% from the same midstream assets that sustain its sponsor. So we added WPZ to the Growth Portfolio with a limit of $42.