Transaction would transform the U.S.
midstream sector, creating one of the largest U.S. energy
groups
Williams stockholders would receive shares
issued by new ETE C-corp
Proposal offers 32.4% premium to Williams
stockholders with a high degree of transaction certainty
Transaction would be compelling to all
stakeholders
Energy Transfer Equity, L.P. (NYSE: ETE) (“ETE”) today confirmed
that it has made a proposal to merge with The Williams Companies,
Inc. (NYSE: WMB) ("Williams" or "WMB") in an all-equity transaction
valued at $53.1 billion, including the assumption of debt and other
liabilities.
ETE initially made its offer in a letter dated May 19, 2015, to
Alan Armstrong, the CEO of Williams, followed by a letter dated
June 11, 2015 sent to the Williams Chairman of the Board, and most
recently confirmed its offer in a letter dated June 18, 2015 sent
to the Williams Board of Directors.
Under its merger proposal, ETE would acquire all of the
outstanding common stock of Williams at an implied price of $64 per
Williams share, which represents a 32.4% premium to the Williams
common share closing price as of June 19, 2015. The merger
consideration would be in the form of common shares in an entity
that would elect to be taxed as a C-corp (“ETE Corp”). Shares of
ETE Corp would have the same economic attributes as ETE common
units. The number of ETE Corp shares to be issued to Williams
stockholders will be based on a fixed exchange ratio of 0.9358 ETE
Corp shares for each Williams share, reflecting ETE’s offer of $64
per Williams share and ETE’s unit price of $68.39 as of June 19,
2015. This exchange ratio will be subject to adjustment for the
previously announced two-for-one ETE unit split. ETE Corp would be
publicly traded on the NYSE under the symbol “ETC.” The transaction
would be tax-free to Williams stockholders and, following the
merger, ETE Corp stockholders would receive Form 1099s as opposed
to schedule K-1s for tax purposes.
ETE has made multiple attempts over an almost 6-month period to
engage in meaningful, friendly dialogue with the senior management
of Williams regarding a proposed merger. As a result of the
announcement of the Williams and Williams Partners L.P. (NYSE: WPZ)
merger on May 13, 2015, ETE felt compelled to send its written
offer to Williams in an effort to bring ETE’s interest to the
attention of the Williams Board and to outline what ETE believes is
a more compelling transaction than the proposed merger between
Williams and WPZ.
In addition, ETE stated in its proposal that it did not foresee
any regulatory impediments to a merger with Williams and that ETE
would accept the regulatory risk related to the closing of the
merger. Moreover, ETE has noted that there would be no requirement
for an ETE unitholder vote, providing additional deal certainty to
Williams stockholders. ETE’s offer is conditioned on the
termination of the WPZ merger agreement pursuant to its terms.
Kelcy Warren, ETE’s Chairman, said: “Generally, 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. I am truly excited at the
prospect of bringing together these two businesses under a common
platform and creating additional value for every stakeholder.”
ETE is 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.
Unfortunately, until Williams’ announcement today, Williams’
management has inexplicably ignored ETE’s efforts to engage in a
discussion with Williams regarding a transaction that presents a
compelling value proposition for its stockholders. After the WPZ
merger announcement, ETE believed that it had no other choice but
to provide the detailed terms of its interest to the Williams
Board. ETE did that and, for the last five weeks, it has been
waiting to commence a constructive and open dialogue. Now that
Williams has finally responded, ETE intends to engage with Williams
to the extent that Williams undertakes a fair and even-handed
process.
ETE believes that a merger with Williams and adding WPZ to its
family of partnerships would create significantly more value to the
Williams stockholders than the proposed merger of Williams and WPZ.
As part of ETE’s proposal, WPZ would retain its current name and
remain a publicly traded partnership headquartered in Tulsa,
Oklahoma. There is no impact from this transaction on Energy
Transfer Partners L.P (‘ETP’), Sunoco Logistics Partners L.P.
(‘SXL’) or Sunoco L.P. (‘SUN’).
ETE believes there are numerous meaningful benefits to all
parties from a proposed combination of ETE and WMB:
WMB Stakeholders
- A compelling alternative to the
proposed Williams/WPZ merger (following the announcement of which
Williams’ stock price has fallen to below pre-announcement levels)
that provides Williams stockholders with:
- a $64 per share offer price,
representing a significant premium of 32.4% to Williams’ closing
trading price as of June 19, 2015;
- a dividend per share that would exceed
the dividend per share that Williams has forecasted Williams
stockholders would receive on a standalone basis and on a pro forma
basis for the proposed Williams/WPZ merger, as outlined in
Williams’ May 13th merger announcement;
- dividend growth far superior to that of
Williams on a standalone basis or on a pro forma basis for the
proposed Williams/WPZ merger;
- Williams stockholders would receive
common shares in ETE Corp that would have the same economic
attributes as ETE common units, which is a currency that continues
to be the best performing large cap company in the sector, driven
by ETE’s successful track record of operational execution and
growth.
- the exchange of Williams shares for ETE
Corp shares would be tax free to Williams stockholders;
- Williams stockholders would benefit
from the cash flow diversification associated with being part of
the world’s largest energy infrastructure group and the third
largest energy franchise in North America, underpinned by three of
the largest and most highly respected investment grade MLPs in the
industry (ETP, SXL and WPZ);
- the combination would create a truly
unique and diversified collection of compatible businesses that
will drive more near- and long-term value for all
stakeholders;
- ETE would become co-obligor of
Williams’ existing debt which should maintain the credit profile of
Williams’ existing debt, and Williams’ credit facility would be
terminated at closing; and
- ETE Corp shares will have tremendous
liquidity and a strong growth profile.
WPZ Stakeholders
- WPZ unitholders will not incur any
adverse tax consequences as a result of a combination of Williams
and ETE as compared to potential significant adverse tax
consequences for many WPZ unitholders if the proposed Williams/WPZ
merger is completed;
- there is no expected impact to WPZ’s
credit ratings as a result of the ETE/Williams combination;
- WPZ unitholders will be able to realize
material upfront cost savings and synergies because WPZ will join
the Energy Transfer shared service model that we believe will
result in more distributable cash flow for WPZ;
- the combination will create new
commercial opportunities for WPZ, including the potential to
acquire assets from the overall Energy Transfer group, that will
improve WPZ’s business outlook and performance;
- WPZ unitholders will benefit from
having a general partner, ETE, that will be in a position to be
able to help WPZ fully realize its long-term growth potential;
and
- WPZ will receive the benefit of a $410
million break-up fee upon the termination of its merger agreement
with Williams.
ETE Stakeholders
- A combination of ETE and Williams is
immediately accretive to distributable cash flow for ETE and will
take ETE to the next level in terms of cash flow diversification
and improved credit profile;
- ETE’s distribution growth rate will
continue to remain best in class and ETE believes that the duration
of that leading performance will be longer as a result of merging
Williams into the Energy Transfer family;
- the transaction creates the world’s
largest energy infrastructure group and the third largest energy
franchise in North America;
- the number of opportunities to migrate
assets within the Energy Transfer family and find new commercial
opportunities within the expanded asset base will increase
significantly. These types of opportunities will create more value
for ETP, SXL, WPZ and SUN, and as a result, more cash flow growth
for ETE in the future;
- the ability of ETE to broaden its
overall spectrum of institutional investors through the ETE Corp
structure; and
- the creation of ETE Corp should result
in increased liquidity for ETE unitholders because of their ability
to elect, after completion of the combination with Williams and ETE
and at their option, to exchange ETE common units for common stock
in ETE Corp.
Although ETE intends to pursue its proposal, there can be no
assurance that any transaction with Williams will be
consummated.
Wachtell, Lipton, Rosen & Katz and Latham & Watkins are
acting as legal counsel to ETE.
Energy Transfer Equity, L.P. (NYSE:ETE) is a master
limited partnership which owns the general partner and 100% of the
incentive distribution rights (IDRs) of Energy Transfer Partners,
L.P. (NYSE: ETP), approximately 23.6 million ETP common units,
approximately 81.0 million ETP Class H Units, which track 90% of
the underlying economics of the general partner interest and IDRs
of Sunoco Logistics Partners L.P. (NYSE: SXL), and 100 ETP Class I
Units. On a consolidated basis, ETE’s family of companies owns and
operates approximately 71,000 miles of natural gas, natural gas
liquids, refined products, and crude oil pipelines.
Forward-looking Statements
This communication may contain forward-looking
statements. These forward-looking statements include, but are
not limited to, statements regarding ETE’s offer to
acquire Williams, its expected future performance (including
expected results of operations and financial guidance), and the
combined company's future financial condition, operating results,
strategy and plans. Forward-looking statements may be identified by
the use of the words "anticipates," "expects," "intends," "plans,"
"should," "could," "would," "may," "will," "believes," "estimates,"
"potential," "target," "opportunity," "designed," "create,"
"predict," "project," "seek," "ongoing," "increases" or "continue"
and variations or similar expressions. These statements are based
upon the current expectations and beliefs of management and are
subject to numerous assumptions, risks and uncertainties that
change over time and could cause actual results to differ
materially from those described in the forward-looking statements.
These assumptions, risks and uncertainties include, but are not
limited to, assumptions, risks and uncertainties discussed in the
most recent Annual Report on Form 10-K and Quarterly Report on Form
10-Q for each of ETE, ETP and SXL filed with the U.S.
Securities and Exchange Commission (the "SEC") and
assumptions, risks and uncertainties relating to the proposed
transaction, as detailed from time to time in ETE’s, ETP’s and
SXL’s filings with the SEC, which factors are incorporated herein
by reference. Important factors that could cause actual results to
differ materially from the forward-looking statements we make in
this communication are set forth in other reports or documents that
ETE, ETP and SXL file from time to time with the SEC include,
but are not limited to: (1) the ultimate outcome of any potential
business combination transaction between ETE, ETE Corp. and
Williams including the possibilities that ETE will not pursue
a transaction with Williams and
that Williams will continue to reject a transaction with
ETE and fail to terminate its existing merger agreement with WPZ;
(2) if a transaction between ETE, ETE Corp. and Williams were
to occur, the ultimate outcome and results of integrating the
operations of ETE and Williams, the ultimate outcome of ETE’s
operating strategy applied to Williams and the ultimate
ability to realize cost savings and synergies; (3) the effects of
the business combination transaction of ETE, ETE Corp. and
Williams, including the combined company's future financial
condition, operating results, strategy and plans; (4) the ability
to obtain required regulatory approvals and meet other closing
conditions to the transaction, including approval under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and Williams stockholder approval, on a timely basis or at all; (5)
the reaction of the companies’ stockholders, customers, employees
and counterparties to the proposed transaction; (6) diversion of
management time on transaction-related issues; (7) unpredictable
economic conditions in the United States and other
markets, including fluctuations in the market price of ETE common
units and ETE Corp. common shares; (8) the ability to obtain the
intended tax treatment in connection with the issuance of ETE
common shares to Williams stockholders; (9) the ability to maintain
Williams’ and WPZ’s current credit ratings and (10) the risks and
uncertainties detailed by Williams and WPZ with respect
to their respective businesses as described in their respective
reports and documents filed with the SEC. All forward-looking
statements attributable to us or any person acting on our behalf
are expressly qualified in their entirety by this cautionary
statement. Readers are cautioned not to place undue reliance on any
of these forward-looking statements. These forward-looking
statements speak only as of the date hereof. ETE undertakes no
obligation to update any of these forward-looking statements to
reflect events or circumstances after the date of this
communication or to reflect actual outcomes.
Additional Information
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended. This communication relates to a
proposal which ETE has made for a business combination
transaction with Williams. In furtherance of this proposal and
subject to future developments, ETE and ETE Corp. (and, if a
negotiated transaction is agreed, Williams) may file one or
more registration statements, proxy statements or other documents
with the SEC. This communication is not a substitute for any
proxy statement, registration statement, prospectus or other
document ETE, ETE Corp. or Williams may file with
the SEC in connection with the proposed transaction.
INVESTORS AND SECURITY HOLDERS OF ETE AND Williams ARE URGED TO
READ THE PROXY STATEMENT(S), REGISTRATION STATEMENT, PROSPECTUS AND
OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF
AND WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION TRANSACTION.
Any definitive proxy statement(s) (if and when available) will be
mailed to stockholders of Williams. Investors and security
holders will be able to obtain free copies of these documents (if
and when available) and other documents filed with
the SEC by ETE through the web site maintained by
the SEC at http://www.sec.gov. Copies of the
documents filed by ETE and ETE Corp. with the SEC will be available
free of charge on ETE’s website
at www.energytransfer.com or by contacting Investor
Relations at 214-981-0700.
ETE and its directors, executive officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information regarding the directors and officers of ETE’s general
partner is contained in ETE’s Annual Report on Form 10-K filed with
the SEC on March 2, 2015 (as it may be amended from time to time).
Additional information regarding the interests of such potential
participants will be included in the proxy statement/prospectus and
other relevant documents filed with the SEC if and when they become
available. Investors should read the proxy statement/prospectus
carefully when it becomes available before making any voting or
investment decisions. You may obtain free copies of these documents
from ETE using the sources indicated above.
ETE Exchange Offer
This communication is not a substitute for any registration
statement, prospectus or other document ETE and ETE Corp. may file
with the SEC in connection with any offer to ETE
unitholders to exchange their ETE common units for common shares in
ETE Corp. In connection with any offer to ETE unitholders to
exchange their ETE common units for common shares in ETE Corp., ETE
and ETE Corp. may file a registration statement and other documents
with the SEC. INVESTORS AND SECURITY HOLDERS OF ETE ARE URGED TO
READ THE REGISTRATION STATEMENT AND OTHER DOCUMENTS FILED WITH THE
SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE
AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED OFFER
TO EXCHANGE. Investors and security holders may obtain free copies
of these documents if any when they become available from ETE using
the sources indicated above.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150621005058/en/
Investor Relations:Energy TransferBrent Ratliff,
214-981-0795orLyndsay Hannah, 214-840-5477orInnisfree M&A
IncorporatedArthur Crozier / Jennifer Shotwell / Scott
Winter212-750-5833orMedia Relations:Granado Communications
GroupVicki Granado, 214-599-8785Cell: 214-498-9272orBrunswick
GroupSteve Lipin, 212-333-3810orMark Palmer, 214-254-3790
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