Williams Cos. Inc. (WMB)

[eastunder]

Does Suit Spell End of Williams-ETE Deal? Shares Rise on Hope


By Amey Stone

http://blogs.barrons.com/incomeinvesting/2016/04/07/does-suit-spell-end-of-williams-ete-deal-shares-rise-on-hope/?mod=yahoobarrons&ru=yahoo

The share prices of Williams Cos. (WMB), Energy Transfer Equity (ETE) and their related master limited partnerships have mostly risen for two days as investors judge that a new lawsuit between the parties is a sign the deal is likely to dissolve.

Reorg Research writes:


Market participants look at the move as a potential step toward blowing up the deal, and the securities of all the involved entities have benefited from that possibility.

As of mid-afternoon Thursday, ETE was at $7.16, up 11% from $6.45 at Tuesday’s close. WMB was at $15.70 a share, up from $14.81 at Tuesday’s close, a 6% rise. Williams Partners (WPZ) rose about the same amount. Energy Transfer Partners (ETP) was lower Thursday, but rose Wednesday.

Reorg Research also looked at some of the details of the lawsuit and the convertible securities at the heart of it. The research firm notes that ETE may have violated one of the terms of their agreement:


ETE is not permitted to “authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock … .” If Williams terminates the agreement because of ETE’s breach of covenants in the merger agreement, then ETE may be required to reimburse Williams’ fees and expenses up to $100 million.

Energy Transfer said Wednesday that it believes it has complied with all the terms of the merger agreement.

Both Williams and Energy Transfer have made recent statements that they endorse the merger. Williams shareholders still need to vote to approve the proposed deal.