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Stephen Simpson, CFA • 11 Comments
Today, 10:39 AM
- Williams Cos. (WMB -1.2%) says it will seek monetary damages from Energy Transfer Equity (ETE +2.5%) for breaching their merger deal, saying it does not believe ETE had a right to terminate the agreement.
- Overnight, ETE officially terminated the merger, a move that was expected after a Delaware judge ruled on Friday that it could back out since its lawyers could not deliver a necessary opinion on the deal’s tax treatment.
- WMB has said the deal’s collapse could cost $4B-$10B in lost value for its shareholders.
Mon, Jun. 27, 9:13 AM
Mon, Jun. 27, 8:32 AM
- Williams Cos. (NYSE:WMB) -6.6% premarket after Friday's court ruling likely ends the merger with Energy Transfer Equity (NYSE:ETE).
- Ahead of a shareholder meeting today, WMB continues to ask its shareholders to vote in favor of the deal, and WSJ reports it is considering appealing the ruling, and could sue ETE for damages if it loses that appeal.
- Assuming the merger does not work out, WMB must decide what sort of company it wants to be; former CEO Keith Bailey believes the company should go back to basics - “steady growth over time.”
- WMB already has telegraphed one move: Earlier this month, it said it may have to cut its $0.64 quarterly dividend by a “material” amount, perhaps by as much as 60%, says Evercore ISI's Timm Schneider.
- But WMB still has plenty going for it, with the assets - a vast network of pipes in the Marcellus shale formation and the 10k-mile Transco pipeline - that made it so appealing to ETE in the first place, and it could revisit a plan to buy its Williams Partners (NYSE:WPZ) MLP or entertain offers from another buyer.
- ETE +7.7% premarket.
Fri, Jun. 24, 5:36 PM
Fri, Jun. 24, 4:57 PM
- Energy Transfer Equity (NYSE:ETE) +7.3% AH after the judge rules in its favor in the merger dispute with Williams Cos. (WMB -6.8%).
- The judge says ETE's lawyers were not deliberately sabotaging the merger and that the company's fears of an unexpected tax bill were genuine.
- "Motive to avoid a deal does not demonstrate lack of a contractual right to do so," judge Sam Glasscock wrote. “A desperate man can be an honest winner of the lottery."
- Analysts believed the judge flagged his decision when he said a key issue in the dispute was whether the lawyers hired to assess the tax implications of the merger acted in good faith when they determined it was damaged by complications (I, II).
Wed, Jun. 22, 2:23 PM
- Energy Transfer Equity (ETE +2.6%) extends yesterday's gains as Wall Street bets the judge in the merger trial will rule in its favor and against Williams Cos. (WMB -2.7%), and allow it to walk away without paying a breakup fee.
- Bloomberg reports that the spread traded by those speculating on whether the deal will fall apart reached a record high today after the judge said yesterday that a key issue is whether the lawyers hired to assess the tax implications of the deal acted in “good faith” when they concluded it was marred by complications.
- "We believe ETE won,” Evercore analyst Timm Schneider says. “We do not believe there was enough evidence that would lead the judge to rule [ETE's lawyers] acted in ‘bad faith.”’
- Bloomberg's Brandon Barnes says the court could find a way to credit both sides’ arguments with an opinion that gives both something instead of declaring either party an outright winner.
Mon, Jun. 20, 3:28 PM
- Energy Transfer Equity (ETE -6.2%) CEO Kelcy Warren feared that pushing ahead with a merger with Williams Cos. (WMB +0.2%) after oil prices plunged would cause a credit ratings downgrade and cause an "implosion," former CFO Jamie Welch said today during a Delaware Chancery Court trial over the faltering merger.
- Welch also said Warren was “uninterested in restructuring” the deal, brushing aside offers from WMB to revise the merger to address questions about whether the IRS would view the combination as properly freeing investors' tax liabilities.
- On the equity offering that WMB says was designed in part to unfairly increase Warren’s payout on units he held in some ETE’s partnerships, Welch said he opposed setting up the offering that way, adding that Warren did not receive a salary or bonus and relied on the payments.
- The judge is hearing evidence to determine whether ETE or WMB violated the merger agreement in ways that make it impossible to close the deal, once valued at $32B.
Fri, Jun. 17, 12:46 PM
- Williams Cos. (WMB +1.6%) files a presentation that says the potential financial benefit expected from its pending merger with Energy Transfer Equity (ETE +0.1%) could be 94% lower than initial projections, the latest evidence that the deal is on shaky ground.
- The companies now estimate merger-related synergies of $126M/year by 2020, far lower than $2B-plus in annual synergies initially projected by ETE when the takeover deal was struck in September; even if market conditions return to July 2015 levels, merger-related synergies would equal only $543M.
- The new estimate is a result of the "joint integration planning process in early 2016” by both companies, according to the presentation.
- Also, WMB's board declares a $0.10/share special dividend to stockholders upon closing of the deal.
Wed, Jun. 15, 12:42 PM
- Williams Cos. (WMB +5.2%) says proxy advisory firm ISS is recommending that shareholders vote in favor of Energy Transfer Equity's (ETE +1.2%) takeover bid.
- Among the factors cited by ISS are the significant cash component of the bid, the more diversified customer base of the combined company, upside exposure to significant growth opportunities such as Lake Charles LNG, and the opportunity to own nearly half the equity in a combined company anticipated to have much stronger free cash flow than WMB on a stand-alone basis.
- In its own letter urging support for the deal, WMB says the merger would lead to "significant synergies" and reiterates that it could cut the dividend if the pending deal is not completed.
- WMB shareholders are set to vote on the troubled merger deal - valued at ~$33B when it was announced - on June 27.
Thu, Jun. 9, 3:20 PM
- Williams Cos. (WMB +0.7%) is higher and Energy Transfer Equity (ETE -3.3%) is sharply lower after the Federal Trade Commission approves their merger with conditions.
- The FTC says the companies must agree to sell WMB's 50% stake in the Gulfstream Natural Gas System, an interstate pipeline that serves Florida, particularly the state's electric power companies.
- The merger, originally valued at ~$38B, may not close in H1 as scheduled because the agreement with the FTC is subject to a 30-day public comment period, which will end on July 11.
Wed, Jun. 8, 10:47 AM
- While committing to pay a $0.64/share dividend for the current quarter, Williams Cos. (WMB +0.1%) warns it would cut its dividend in the next quarter if a deal to sell itself to Energy Transfer Equity (ETE +2.2%) falls through.
- WMB, which reiterates its commitment to closing the ETE deal, says it has not determined the amount of any dividend cut but that it "could be material."
- WMB shareholders are scheduled to vote June 27 on the deal, which ETE has been trying to restructure or exit altogether.
Tue, Jun. 7, 3:22 PM
- The mayor of Tulsa, Okla., home to the headquarters of Williams Cos. (WMB +1.8%), says Energy Transfer Equity's (ETE +0.9%) proposed takeover has "no business or industrial logic" and may be “tragic” for the city and WMB’s shareholders.
- "My city will bear a very substantial cost for a transaction that destroys value for the shareholders it is supposed to benefit," Bartlett says in his letter.
- Mayor Bartlett's plea comes less than a week after three former WMB CEOs raised similar concerns in their own letter to stockholders.
- A vote against the deal would preserve WMB's independence and provides “the opportunity for substantial value accretion once the overhang of this transaction is gone," the CEOs said.
Fri, May 27, 8:16 AM
- Energy Transfer Equity (NYSE:ETE) files a counterclaim in the recent lawsuit brought by Williams Cos. (NYSE:WMB), asking the Delaware Court of Chancery to rule that it can "immediately terminate” the merger agreement between the two companies.
- ETE says WMB broke the agreement by, among other things, refusing to cooperate with ETE’s efforts to finance the deal and failing to make “reasonable best efforts” to complete it; having breached the merger terms, ETE says WMB should pay it a $1.48B breakup fee.
- It’s no surprise, but ETE has now "confirmed the fact that they want to get out” of the merger, Bloomberg's Michael Kay says. “Williams isn’t going to back off, and Energy Transfer wants out of the current deal structure now.”
- ETE +1.9%, WMB +0.6% premarket.
Wed, May 25, 3:57 PM
- Williams Cos. (WMB -3.9%) says the SEC has declared effective Energy Transfer Equity's (ETE -9.6%) S-4 registration statement, clearing WMB to mail its final proxy statement and schedule a shareholder vote for June 27 on its $33B merger with ETE.
- ETE says the companies have agreed to a trial to be held June 20 and June 21 to determine whether the deal can close with a tax opinion from Latham & Watkins that the contribution of Williams’ assets to ETE should qualify as a 721 exchange.
- Recent share price action indicates a higher likelihood that WMB will be able to hold ETE to the merger; the gap between WMB's trading price and the value of the cash-and-stock deal has narrowed by more than half over the past week, from nearly $8/share to less than $4/share.
- Now read Yes, Williams Cos. really wants Energy Transfer deal to go through
Thu, May 5, 12:38 PM
- "We can't close this deal," Energy Transfer Equity (ETE +6.4%) CEO Kelcy Warren says of the takeover of Williams Cos. (WMB +3.9%) without the tax opinion that would deem the transaction an exchange that frees shareholders from tax liabilities.
- "Absent a substantial restructuring of this transaction, which Energy Transfer has been very willing and actually desiring to do, absent that, we don't have a deal," Warren said in today's earnings conference call, adding that ETE would be open to a deal that would remove the cash portion of its cash-and-stock bid for WMB.
- ETE general counsel Thomas Mason said on the call that adviser Latham & Watkins had looked for a solution to the tax problem but had failed to find one, and legal advisers reached the same conclusion; he said either party could walk away from the deal after a June 28 deadline, but that ETE is "not focused" on that right now.
- Also: ETP +8.9%, WPZ +3.4%.
- Now read Energy Transfer nixes Williams proposals to resolve tax issues
Tue, Apr. 19, 12:34 PM
- Research firm CreditSights thinks now is "a great entry point" to buy Williams Partners (WPZ +4.9%) bonds even as the merger plans of parent company Williams Cos. (WMB +4.2%) and Energy Transfer Equity (ETE +5.4%) appear to become more remote.
- CreditSights upgrades WPZ bonds to Outperform from Market Perform, liking the bonds whether or not the merger closes and believing that WMB has the balance sheet and the incentive to keep its MLP subsidiary investment grade; if the merger does go through, the firm says the just-filed S4 on the deal gives new disclosure that ETE will eliminate its dividend entirely in order to support investment grade ratings at Energy Transfer Partners (ETP +2.8%) and WPZ.
- The firm believes ETE is hoping WMB shareholders will vote against the merger, and that recent negative disclosures are part of that effort.
- Now read Williams is worth owning even if the Energy Transfer Equity merger fails
The Williams Cos., Inc. operates as an integrated natural gas company that explores, produces, transports, sells and processes natural gas and petroleum products. It operates through three segments: Williams Partners, Williams NGL & Petchem Services and Others. The Williams Partners segment... More
Sector: Basic Materials
Industry: Oil & Gas Pipelines
Country: United States
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