Thursday, June 25, 2015
Energy Transfer Equity LP (ETE, Dallas) confirmed June 22 that it had made a proposal to merge with the Williams Cos. (Tulsa) in an all-equity transaction valued at $53.1 billion, including the assumption of debt and other liabilities. Under the proposal, ETE would acquire all outstanding Williams common stock at a premium to the closing share price as of June 19, 2015. ETE noted that it had made multiple attempts over a six-month period to engage Williams’ senior management in dialogue On May 13, ETE sent a written offer to Williams in an effort to attract the attention of the Williams board of directors.
ETE stated in its proposal that it did not foresee any regulatory impediments to the merger and that it would accept the regulatory risk related to the closing. In addition, ETE noted there would be no requirement for an ETE unit holder vote, providing certainty to Williams’ stockholders. Kelcy Warrens, ETE chairman, said, “I have not been supportive of transactions that involve the issuance of ETE units given my belief that ETE units remain significantly undervalued. However, I believe that a combination of Williams’ assets with ETE will create substantial value that would not be realized otherwise. Therefore, I am a strong proponent of this transformative combination and support the issuance of a significant amount of ETE securities to complete the transaction.”
In response to the merger offer, Williams declined, saying that its board of directors has authorized a process to explore a range of strategic alternatives following the receipt of ETE’s unsolicited proposal. With the assistance of its outside financial and legal advisors, the Williams board said it had carefully considered the ETE offer and determined that it significantly undervalues Williams and would not deliver value commensurate with what Williams expects to achieve on a standalone basis and through other growth initiatives.
“Our board and management team remain committed to acting in the best interests of our shareholders, and in light of the unsolicited proposal, our board believes it is in the best interest of shareholders to conduct a thorough evaluation of strategic alternatives,” said Alan Armstrong, president and CEO of Williams. “Williams’ premier infrastructure connects the best natural gas supplies to the best markets, and our strategy has provided substantial shareholder value, allowing us to deliver a compound annual dividend growth rate of approximately 30% since we embarked on our strategy in 2012.”
ETE stated in its proposal that it did not foresee any regulatory impediments to the merger and that it would accept the regulatory risk related to the closing. In addition, ETE noted there would be no requirement for an ETE unit holder vote, providing certainty to Williams’ stockholders. Kelcy Warrens, ETE chairman, said, “I have not been supportive of transactions that involve the issuance of ETE units given my belief that ETE units remain significantly undervalued. However, I believe that a combination of Williams’ assets with ETE will create substantial value that would not be realized otherwise. Therefore, I am a strong proponent of this transformative combination and support the issuance of a significant amount of ETE securities to complete the transaction.”
In response to the merger offer, Williams declined, saying that its board of directors has authorized a process to explore a range of strategic alternatives following the receipt of ETE’s unsolicited proposal. With the assistance of its outside financial and legal advisors, the Williams board said it had carefully considered the ETE offer and determined that it significantly undervalues Williams and would not deliver value commensurate with what Williams expects to achieve on a standalone basis and through other growth initiatives.
“Our board and management team remain committed to acting in the best interests of our shareholders, and in light of the unsolicited proposal, our board believes it is in the best interest of shareholders to conduct a thorough evaluation of strategic alternatives,” said Alan Armstrong, president and CEO of Williams. “Williams’ premier infrastructure connects the best natural gas supplies to the best markets, and our strategy has provided substantial shareholder value, allowing us to deliver a compound annual dividend growth rate of approximately 30% since we embarked on our strategy in 2012.”
