By Alison Sider
Energy Transfer Equity LP said it would pursue a
multibillion-dollar deal to acquire rival pipeline operator
Williams Cos. with or without the company's cooperation.
Energy Transfer had been quietly pursuing Williams for six
months when the pipeline company rejected an all-equity offer
valued at $48 billion last month. Now Energy Transfer, run by
Dallas billionaire Kelcy Warren, is signaling that it may be
willing to go in a hostile direction with its takeover bid.
In a statement issued late Tuesday, Energy Transfer was critical
of how Williams has responded to its proposal and reiterated its
offer--an offer Williams has already deemed too low.
The company "continues to be open to engaging in the strategic
alternatives process announced by Williams, but only if it is fair
and evenhanded and is not designed to disadvantage" Energy
Transfer, the statement said.
If Williams continues to rebuff Energy Transfer's overtures, the
company said it would take whatever steps are necessary to make its
proposal a reality, including trying to derail a $13.8 billion deal
Williams announced in May to streamline its own corporate structure
by buying a subsidiary.
"The Williams Board of Directors and management team are
committed to acting in the best interests of shareholders, and
believe a robust, competitive process is the best way to maximize
shareholder value," the company said late Tuesday.
Williams is working with several companies, including Energy
Transfer, and has had constructive dialogue with each of them,
according to a person familiar with the matter.
The bid first came to light last month after Williams announced
it had hired bankers and lawyers to help it review strategic
alternatives, after rejecting an unsolicited bid from an unnamed
buyer at $64 a share. At the time of the Williams announcement, the
price offered was a 32% premium to shares of the Tulsa, Okla.-based
company.
Shares of Williams shot up to an all-time high the day after its
announcement, but have since pulled back to $56.89 on Tuesday.
Energy Transfer's stock price has fallen by 8% since before its bid
for Williams was announced, to close at $63.59 on Tuesday.
Many analysts and industry observers said the deal would make
sense. Williams has attracted criticism for financial missteps but
there are few other companies large enough to take it on.
Williams announced plans in the spring to absorb a pipeline
subsidiary, Williams Partners, in a $13.8 billion deal. Energy
Transfer has said it is only interested in buying Williams Cos. as
is, and is willing to solicit against the consolidation plan if it
comes to that.
This isn't the first contentious deal that has pitted Energy
Transfer and Williams against each other. In 2011, Energy Transfer
agreed to buy pipeline operator Southern Union Co. for $4.2 billion
when Williams tried to scuttle the deal with a higher offer. Energy
Transfer ultimately had to pay $5.7 billion to win.
Though little-known outside of the energy patch, Energy Transfer
has become one of top oil and gas transportation companies in the
U.S. The company controls an intricate network of 70,000 miles of
oil, gas and fuel lines.
Geographically, a deal with Williams would give Energy Transfer
an expanded footprint. And Williams has significant fuel-moving
capabilities in the northeastern U.S., where it is tough to build
new pipelines because projects tend to be fraught with political
tension and delays. Most of Energy Transfer's oil and gas lines are
located across the South and Midwest. Since there is little overlap
between the two companies' networks, analysts have predicted that
federal regulators would probably approve a combination of the
companies.
Write to Alison Sider at alison.sider@wsj.com
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