M&A

Until now, Energy Transfer Equity (ETE) CEO Kelsey Warren has been the golden boy. By snapping up a series of small pipeline companies at just the right time, Warren has created the ETE empire and turned himself into a billionaire in the process. It seemed he could do no wrong when it came to midstream business deals. And then he bit off more than he could chew: Williams. Warren pursued Williams for more than six months before it became public (see Energy Transfer Makes “Indecent Proposal” to Buy Williams for $48B). It took another three months after that before he finally got them to agree to a merger (see Williams Accepts ETE’s “Indecent Proposal” – Price Went Down $10B). Whether it was rotten timing, or rotten planning, the natural gas market crashed and the deal turned from crowning jewel to albatross. Along the way Warren pulled some shenanigans, like creating a privileged class of stock that gave himself and his buddies a leg up on Williams shareholders (see Merger Turns Sour: Williams Sues ETE/CEO Kelcy Warren). A Bloomberg article chronicles the rise, and now fall, of the midstream’s golden boy…
Read More “Aborted Williams Merger/Shenanigans Take the Shine Off ETE’s CEO”

Yesterday MDN brought you a story of how the Williams/Energy Transfer Equity merger defies logic (see Williams/ETE Merger Defies Logic – Here’s Why). Part of that story deconstructs the support for the deal by proxy advisory firm Institutional Shareholder Services (ISS). The analyst we quote in that article says ISS is buying Williams’ line that Williams’ assets after a merger with ETE will produce boatloads of cash and profit for the newly merged company, while the very same assets apart from the merger won’t. Even though the merged company will have an enormous load of new debt following the merger. It defies logic. And yet, Williams has found two more proxy advisory firms who are now willing to go on the record, like ISS, in support of the merger. What do they see that we don’t? Tune in to this episode of As the (Midstream) World Turns…
Read More “3 Outta 4 Proxy Firms Recommend “Yes” Vote for Williams Merger”

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?”

Last week three former CEOs of the Williams Companies sent a letter to Williams shareholders outlining their reasons for voting against the proposed merger with Energy Transfer Equity (copy of the letter embedded below). The CEOs urge all shareholders to “strongly consider” voting against the deal. The CEOs say the deal would give Williams shareholders a permanent second class status. The mayor of Tulsa, Oklahoma–where Williams is headquartered–is also voicing his opposition to the proposed merger. Mayor Dewey Bartlett Jr. said in his own letter that the merger has no “economic merit” and would be “tragic” for both the city shareholders. MDN told you yesterday we’re dubious the deal will actually happen, based on all of the legal posturing we see (see ETE & Williams Engage in More Posturing Before June 24 Deadline). Will the letter from the CEOs and Tulsa mayor have any effect on the deal?…
Read More “Tulsa Mayor, 3 Former Williams CEOs Blast ETE Merger Deal”