Energy Transfer in effort to renegotiate deal with Williams
Energy Transfer Equity LP (ETE.N) is taking steps that may enable it to renegotiate its $20 billion cash-and-stock acquisition of Williams Companies Inc (WMB.N), according to people familiar with the matter.
Dallas billionaire Kelcy Warren, the chief executive of Energy Transfer, set his sights on Williams last year to transform his empire into one of the biggest pipeline networks in the world. However, a prolonged drop in oil and gas prices has made the deal less economically attractive.
Energy Transfer and Williams are in talks to reduce the number of days specified for completing some of the deal’s administrative requirements, the people said.
This would give them time to engage in renegotiation of terms ahead of a June 28 deadline for the deal to close, the people added.
There is no certainty that such renegotiation talks will occur, let alone be successful, the people cautioned.
The sources asked not to be identified because the deliberations are confidential. Energy Transfer and Williams declined to comment.
Another marquee deal that suffered as result of lower energy prices, U.S. oilfield services provider Halliburton Inc’s (HAL.N) $28 billion acquisition of peer Baker Hughes Inc (BHI.N), was pulled on Sunday after it faced objections from antitrust watchdogs.
The latest development comes after Energy Transfer said in April its lawyers may not be able to deliver an important tax opinion for its takeover of Williams, throwing the agreed acquisition into doubt.
Since the takeover was announced in September 2015, Energy Transfer launched a controversial offering of preferred shares to its top shareholders, for which it is currently being sued by Williams. Energy Transfer has also fired its chief financial officer and slashed projections for cost savings from the Williams deal.
Energy Transfer said last March it expected the base case for earnings before interest, taxes, depreciation and amortization from commercial synergies from the deal to be about $170 million a year by 2020, compared with previous forecasts of more than $2 billion when the deal was unveiled.