Energy Transfer seeks to terminate Williams merger

OREANDA-NEWS. May 27, 2016. Energy Transfer Equity (ETE) is seeking to terminate its previously announced merger agreement with rival Williams, the Dallas-based partnership announced today.

In a counterclaim to a previous lawsuit from Williams, ETE claims Williams breached the terms of their merger agreement by modifying or qualifying its approval of the merger, refusing to cooperate with efforts to finance the deal, and by suing ETE chairman Kelcy Warren. On 24 May a Dallas court dismissed the lawsuit against Warren.

As a result, ETE is now seeking a declaratory judgment from a Delaware court that it is entitled to terminate the agreement and that Williams must pay a \\$1.48bn termination fee.

Williams sued ETE 13 May, seeking to prevent the partnership from terminating the latest merger agreement reached in September, after earlier this month ETE said it might not be able to close the merger because of a tax issue. ETE indicated it wanted to again restructure the deal ahead of a 28 June deadline, after which the parties can step away from the merger.

The deal, worth \\$37.7bn including debt and other liabilities when it was first announced, would combine ETE's 71,000 miles of natural gas, NGL, refined products and crude pipelines with Williams' 33,000 miles of pipelines. ETE would become one of the largest transporters of natural gas in the US and the largest processor of NGLs.

The combined company would also be the third-largest master limited partnership transporter of crude in the US.

The merger agreement, approved by the boards of directors of both companies, was well below the \\$53bn unsolicited bid ETE made for Williams in June, back when crude prices were closer to \\$60/bl. Under the September agreement, ETE would pay \\$43.50 for each share of Williams, for a deal worth about \\$32.6bn not including debt.

Shares of both companies have fallen in the last year amid the drop in oil prices. Williams' shares closed Thursday at \\$20.81, down from near \\$50 per share a year earlier. ETE closed Thursday at \\$11.01 per share, down from about \\$35 per share a year earlier.