By Albert Alfonso
The Williams (NYSE:WMB) and Energy Transfer Equity (NYSE:ETE) merger has been nothing short of a fiasco. Both stocks have seen their share prices eviscerated due to falling energy prices and the complications regarding financing the deal. Thankfully, it now appears the merger is off the books - ETE has officially terminated its merger agreement with WMB. However, this may not be the end of this saga. . . .
. . . ETE had other reasons for wanting to get out of the merger - it was suffering from a serious case of buyer’s remorse.
ETE was having difficulty in financing the $6 billion to be distributed to WMB shareholders in cash as part of the merger consideration. There was also the issue of falling oil and gas prices, which more or less erased all the possible synergies from the merger.
Indeed, this uncertainty led to ETE indicating that it would cut its dividend post merger, a pretty big threat for a stock widely held by income investors. . . .
Williams does not believe ETE had a right to terminate the Merger Agreement because ETE breached the Merger Agreement by (among other reasons) failing to cooperate and use necessary efforts to satisfy the conditions to closing, including delivery of Latham & Watkins LLP’s Section 721(a) tax opinion. Accordingly, on June 27, 2016, Williams filed an appeal with the Delaware Supreme Court in connection with the Delaware Court of Chancery’s June 24, 2016 ruling relating to the Merger Agreement between Williams and ETE.
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