ETE CEO Kelsey Warren Says Williams Merger “Can’t Close”

indecent proposalLast year midstream giant Energy Transfer Equity and its CEO Kelsy Warren pursued Williams, for months, and finally got Williams to agree to a deal to sell itself to Warren for $38 billion (see Williams Accepts ETE’s “Indecent Proposal” – Price Went Down $10B). Over the following months, the gas market tanked price-wise, and Warren got cold feet (see ETE Wants Out of Williams Merger/Takeover, Offering $2B Breakup Fee). Then he wanted to change the deal, making it an all stock-swap deal instead of having to pony up billions in cash–because of tax implications. Along the way Warren got his board to issue a sweetheart stock deal to himself and other top managers/investors as a hedge against the deal, which enraged Williams (see Merger Turns Sour: Williams Sues ETE/CEO Kelcy Warren). On a quarterly earnings call yesterday, ETE’s top brass addressed the Williams merger controversy. CEO Kelsy Warren said point blank: “I’d like to be really direct about this. We can’t close. We don’t have a transaction that can close. So I want to be very clear: We can’t close this transaction … So, 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.” Apparently the deal as proposed by Warren, with a cash component, will be taxable in ways he didn’t plan–so he either wants Williams to accept a stock swap, or bail from the deal. Here’s what was said on yesterday’s phone conference…

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