- Energy Transfer surged as much as 6.7 percent on the report
- Williams plunged as much as 10 percent after the news broke
Energy Transfer Equity LP erased earlier gains from a New York Times report that said the company had considered pulling out of its acquisition of Williams Cos.
Energy Transfer units fell 5.2 percent to settle at $6.80 in New York trading. They surged as much as 6.7 percent after the New York Times reported the pipeline operator had considered pulling out of its proposed takeover of Williams. The company in recent weeks considered, though didn’t present, an offer for a one-time $2 billion payment to Williams to walk away from the deal, said the Times, citing two people with knowledge of the talks.
Earlier Thursday, Chief Financial Officer Thomas Long said Energy Transfer expects to close the deal in the second quarter of 2016, pending approval from Williams shareholders. “We continue to expect substantial synergies as a result of the merger,” Long said on the company’s fourth-quarter earnings call.
Vicki Granado, a spokeswoman for Dallas-based Energy Transfer, declined to comment on the New York Times report Thursday afternoon.
The collapse in oil prices has weighed on the market value of both Energy Transfer and Williams, fueling speculation on whether the takeover will be completed. Energy Transfer had offered $43.50 apiece for Williams shares in September. Williams’s shares have fallen about 61 percent since the deal was announced while Energy Transfer’s units have declined about 71 percent.
Williams plunged as much as 10 percent to $14.92 on the report before settling at $16.03.
The deal’s arbitrage spread, traded by those betting on whether it’ll close, has been volatile in recent weeks. The gap, between Energy Transfer’s offer and Williams’ share price, neared $7 in mid-January, signaling more doubt about whether the deal will be completed. It fell to about $1.25 early this month and was at $2.35 at the close of New York trading Thursday.
Short of filing for bankruptcy, Energy Transfer is stuck buying Williams because of stringent deal terms, the Times reported, citing people involved in the deal.
“It comes down to Williams shareholders,” said Michael Kay, a Bloomberg Intelligence analyst. “You wouldn’t think they’d reject this thing right now.”