In the latest move in the deal/non-deal between pipeline giants Energy Transfer Equity (ETE) and Williams, ETE is seeking the right to exit its-now roughly $17 billion deal to buy Williams – and collect a $1.48 billion breakup fee because its quarry breached the merger terms.
Williams broke the pact between the two pipeline giants by, among other things, refusing to cooperate with Energy Transfer’s efforts to finance the deal and failing to make “reasonable best efforts” to complete it, Dallas, Texas-based ETE said Thursday, in a statement.
The company is asking the Delaware Court of Chancery to rule it can “immediately terminate” the agreement due to the alleged breaches and said it would be entitled to the breakup fee if it did.
“ETE seeks a declaratory judgment that, in the event Latham & Watkins LLP [Latham], its outside tax counsel, is not able to deliver a 721(a) tax opinion prior to the outside date of June 28, 2016, set forth in the merger agreement, ETE will be entitled to terminate the merger agreement without penalty due to the failure of a closing condition,” ETE said.
A termination would mark the end a nearly nine-month ordeal that has seen ETE and Williams fight each other in and out of court over a deal that’s gone downhill since it was announced last September.
At that time, the merger was valued at $32.9 billion. (Williams actually had rejected a $48 billion ETE offer last June.)
The ensuing plunge in oil prices dragged down both companies’ stocks, throwing into question the economics of the transaction – particularly since ETE remained on the hook for the $6 billion cash portion of the offer.
Energy Transfer said Thursday Williams further breached the terms of their agreement by making public statements “implying that the Williams Board supports enforcing the merger agreement as opposed to completing the merger.”
Its court filing is in response to a lawsuit Williams filed earlier this month in an attempt to keep Energy Transfer from using a June 28 closing deadline or a failed tax opinion to pull out of the deal.
Williams said in statement Thursday that Energy Transfer’s latest claims “are entirely without merit and are yet another transparent attempt” by the company to avoid fulfilling its obligations.
The Tulsa, Oklahoma-based company said it’ll prove at trial ETE was the one to breach the merger agreement “through a pattern of obstruction.”
The companies are scheduled to go to trial this month.
ETE also announced the U.S. District Court of Dallas County, Texas, granted a motion to dismiss the lawsuit brought by Williams against ETE Chief Executive Kelcy Warren.
Warren had filed the motion to dismiss on the basis that Williams’ lawsuit against him in Dallas County was a breach of the mandatory forum selection provisions of the merger agreement, among other things.
Williams had accused Warren of “maliciously orchestrating” a unit offering that would guarantee him more than $200 million a year in payments at the expense of other investors.
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