July 2015, Vol. 242, No. 7

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Williams Rejects Merger Offer from Energy Transfer

Energy Transfer Equity (ETE) on Monday confirmed it proposed a merger with The Williams Companies in an all-equity transaction valued at $53.1 billion, including the assumption of debt and other liabilities. Williams rejected the takeover offer.

ETE said it made the offer in a May 19 letter to Williams CEO Alan Armstrong, which was followed in June 11 letter to the Williams chairman of the board.

ETE said in a written statement that it was “disappointed that, despite the best of intentions and its efforts to reach a friendly, negotiated combination, it is forced into a position to publicly confirm its offer for Williams.”

Under the proposal, ETE would acquire all of the outstanding common stock of Williams at $64 per Williams share, representing a 32.4% premium to the Williams common share closing price as of June 19. The ETE was dependent on Williams dropping its $14 billion purchase of Williams Partners LP units it doesn’t already own.

“Generally, I have not been supportive of transactions that involve the issuance of ETE units given my belief that ETE units remain significantly undervalued,” said Chairman Kelcy Warren. “However, I believe that a combination of Williams’ assets with ETE will create substantial value that would not be realized otherwise.”

ETE said it has made several attempts “over an almost six-month period to engage in meaningful, friendly dialogue with the senior management of Williams, regarding a proposed merger.”

In a statement, Williams said, the bid “significantly undervalues Williams and would not deliver value commensurate with what Williams expects to achieve on a standalone basis.”

If a deal takes place it would rank as the largest in pipeline industry history. Last year, Kinder Morgan consolidation of its partnership assets was valued at $48.9 billion, according to data compiled by Bloomberg.