Energy Services

There is something about the proposed merger of Energy Transfer Equity and Williams that’s been bugging us. A uneasy feeling. Why is Williams trying so hard to make this deal happen–when they resisted it just as hard in the beginning? What changed? Why are they now insisting that ETE–who has gotten cold feet and wants out–go forward? Recently Williams published a letter from Institutional Shareholder Services (ISS)–a “leading proxy advisory firm”–recommending that shareholders in Williams vote “yes” on the merger with ETE (see Williams Tries, One Last Time, to Garner Support for ETE Merger). An analyst, writing on the Seeking Alpha investors website, takes Williams and ISS to task–ripping apart the ISS endorsement of the merger. Among his points we found this one the most powerful: “If we are to believe the road show documents filed by WMB to promote the company’s sale to Energy Transfer Equity LP, the same network of pipelines, storage facilities and processing plants owned by WMB and its affiliate, Williams Partners LP, would struggle to produce free cash flow if operated by WMB as a standalone company, yet somehow deliver prosperity as a junior affiliate of ETE.” Exactly! Why would the combined new company, hobbled with more debt, be more successful than each standalone company with less debt? Answer: It wouldn’t. This is a snow job. And for some reason ISS and now a couple of other proxy firms have believed that hogwash…
Read More “Williams/ETE Merger Defies Logic – Here’s Why”

On Friday Williams issued a couple of interesting press releases related to what they hope is a vote to accept Energy Transfer Equity’s offer of a merger. The first press release says the Williams board will pay shareholders 10 cents per share as a bonus if they vote “for” the merger. A little incentive. What we would call a bribe–although there’s nothing illegal about it. It smacks of desperation in our book. But perhaps we know why they’re offering a little more honey to entice people to vote “yes” for the merger. That’s because of the second press release. When the merger was first announced, both ETE and Williams claimed there would be “$2 billion in annual synergies” between the two companies following a merger (see Williams Accepts ETE’s “Indecent Proposal” – Price Went Down $10B). Williams’ second press release on Friday revised that $2 billion “benefit” number down–to almost nothing. Now the claim is there will be $126 million in synergies–94% less than the original claim…
Read More “Williams “Incentivizes” Shareholders to Vote for Merger”

Yesterday Williams published a letter from Institutional Shareholder Services (ISS)–a “leading proxy advisory firm”–recommending that shareholders in Williams should vote “yes” on the merger with Energy Transfer Equity (ETE). Williams will hold a special shareholder’s meeting on Monday, June 27, to vote on the proposed merger. Even if a majority votes in favor of the merger–far from a foregone conclusion–it’s still not a done deal. ETE continues to assert that expert opinions on the taxability of the merger may scuttle the deal. Just a few weeks ago ETE sued Williams to abort the deal (see Midstream Soap: ETE Sues to Walk Away from Williams Takeover Deal). We view all of this–voting for the merger, etc.–as posturing. Fodder for the lawyers to use after the deal fails to consummate. Here’s the latest in our ongoing soap opera that we call, As the (Midstream) World Turns…
Read More “Williams Tries, One Last Time, to Garner Support for ETE Merger”

As MDN reported on Friday, the Federal Trade Commission has granted conditional approval of the Energy Transfer Equity (ETE)/Williams merger deal. The one condition FTC made is that Williams must sell its 50% ownership in Gulfstream Natural Gas System LLC, located in Florida (see As the (Midstream) World Turns: FTC Approves ETE/Williams Merger). ETE has been looking for a way to back out of the deal without losing its shirt in the process. So the question becomes, Will ETE use the FTC condition to scuttle the deal? Or at a minimum, use it to drive Williams back to the table to renegotiate the deal?…
Read More “Will ETE Use FTC’s “Condition” to Scuttle Proposed Williams Merger?”