Williams `Enforcing Its Rights' in Takeover by Energy Transfer

  • Company says it wants to close merger as soon as possible
  • Energy Transfer has rejected two alternative deal structures

Williams Cos., the natural gas pipeline operator that Energy Transfer Equity LP proposed to buy in September, said on Wednesday that it’s committed to “enforcing its rights” under the merger agreement and finishing the deal.

Williams is committed to mailing a proxy statement for a shareholder vote on the takeover and holding that vote as soon as possible, the Tulsa, Oklahoma-based company said in its first-quarter earnings statement. Williams’ profit, excluding one-time items, was 3 cents a share, missing analysts’ estimates by about 14 cents based on data compiled by Bloomberg.

Williams and Energy Transfer are engaged in a multibillion-dollar, increasingly acrimonious merger that’s seen each side sue the other for allegedly breaching obligations. The pipeline giants disagree over whether Energy Transfer should qualify for a tax clearance needed to finalize the deal. Energy Transfer said in April that tax adviser Latham & Watkins LLP hadn’t given a so-called “721 opinion,” which would deem the transaction an exchange that frees shareholders from tax liabilities.

"Williams just wants this to close," said Michael Kay, an analyst for Bloomberg Intelligence.

Growing Doubts

The conflict between the two pipeline giants has increased doubts that the merger will close as the collapse in oil prices is already weighing on their stocks. Both companies have lost about half their market value since Energy Transfer offered $43.50 apiece for Williams shares last September.

In a filing on Wednesday, Energy Transfer said it rejected two alternatives Williams had proposed to resolve the tax dispute. “There is no assurance when or if the merger will be completed, and ETE believes there is substantial risk that the merger will not be consummated,” the company said.

Energy Transfer did not address the deal in its first-quarter earnings statement, released after the close of trading Monday. The company reported profits of 30 cents per limited partner unit for the quarter.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE