ETE terminates merger agreement with Williams

ETE

Last week a Delaware judge ruled that ETE could terminate the Williams Cos. takeover deal after the company’s lawyers raised tax issues in court.

ETE walks away from $20 billion deal

June 29 (Reuters) – Energy Transfer Equity walked away from its more than $20 billion takeover of Williams Cos Inc on Wednesday after months of lawsuits and heated arguments between the rival pipeline companies.

A Delaware judge ruled last week that ETE could terminate the deal after Tuesday over tax issues that the company’s lawyers raised. Williams has appealed that ruling.

Williams said it would seek damages against ETE, which it believes does not have the right to end the deal. It has previously said damages could be as much as $10 billion.

Shares of ETE were up 2.4 percent in morning trading, while Williams was unchanged.

ETE provided written notice terminating the deal because its lawyers did not believe it would be tax-free.

The company originally raised the tax issues in April and rejected two possible solutions proposed by Williams.

The deal has been in doubt for months, with Williams accusing Energy Transfer of trying to break it. The two companies have sued each other.

ETE Chief Executive Officer Kelcy Warren, a Dallas billionaire, set his sights on Williams last year to transform his company into one of the world’s biggest pipeline networks. He made an unsolicited bid last June and reached a deal in late September that was then worth $33 billion.

But oil and gas prices dropped significantly after the merger was announced. The companies’ shares fell sharply, and investors started to worry that the $6 billion cash portion of the deal would saddle ETE with too much debt.

ETE made it clear that it no longer believed the deal was attractive. It slashed estimates for expected cost savings and said it would probably have to cut distributions to shareholders entirely next year if it had to complete the acquisition. It also said it would have to cut jobs substantially in Williams’ home state of Oklahoma.

(Reporting by Michael Erman in New York and Vishal Sridhar in Bengaluru; Editing by Lisa Von Ahn)

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