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...

To view this content, log into your member account. (Not a member? Join Today!)