Energy Transfer Equity LP said the U.S. Federal Trade Commission gave provisional clearance to the pipeline giant's pending acquisition of rival Williams Cos., clearing a hurdle toward completing the troubled merger.

The approval comes a day after Williams warned that it would cut its third-quarter dividend if the pending deal—valued around $33 billion when it was announced—isn't completed. Among other requirements, Williams shareholders also need to approve the merger plan. A shareholder vote is set for June 27.

The FTC clearance is conditioned on the companies meeting certain conditions, including the sale of certain assets, for the deal to proceed.

Energy Transfer has been aiming to restructure or escape the planned acquisition in the wake of low commodities prices that have spread pain through the energy sector. The two pipeline companies have been in a legal tussle as Williams seeks to undo a convertible share issue by Energy Transfer to help fund the deal and force Energy Transfer to proceed with their merger agreement.

In recent afternoon trading, Energy Transfer shares fell 4.3% to $13.47, and Williams shares rose 1.4% to $23.50.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

June 09, 2016 15:45 ET (19:45 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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