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FTC Orders Gulfstream Divestiture in Energy Transfer-Williams OK

The U.S. Federal Trade Commission (FTC) on Thursday cleared Energy Transfer Equity LP's (ETE) proposed acquisition of The Williams Companies Inc. (WMB) and specified assets to be divested.

Under terms of a proposed order, ETE "...must divest to a Commission-approved buyer Williams' ownership interest in Gulfstream Natural Gas System LLC (Gulfstream), an interstate natural gas pipeline serving peninsular (central and southern) Florida," the FTC said in an analysis accompanying the proposed order. ETE has a 50% interest in Florida Gas Transmission, the other interstate pipeline currently serving the peninsular Florida market. Williams has a 50% interest in Gulfstream.

"The order also addresses competitive concerns arising from ETE's post-merger control over a Williams pipeline segment that serves as the origin for a new interstate pipeline [Sabal Trail (see Daily GPIFeb. 3)] that will begin serving Florida in 2017," FTC said. To address the anticompetitive concerns, "[t]he order maintains the premerger bargaining position of the new pipeline [Sabal Trail] to negotiate future capacity expansions over the Williams pipeline segment."

FTC said Sabal Trail's sole access to natural gas will be via a leased segment on the Williams-owned Transcontinental Gas Pipe Line (Transco) system. "Sabal Trail and Transco are parties to a capacity lease agreement whereby Transco has agreed to expand the leased segment on its system in several phases -- with each phase to provide a specific amount of new pipeline capacity -- to support Sabal Trail's operations in peninsular Florida," FTC said.

After a 30-day comment period, the FTC will review the consent agreement and record and decide whether to make the order final.

"The FTC's clearance is subject to certain conditions, which ETE and WMB have agreed to undertake, to be satisfied following a closing of ETE's acquisition of WMB, including the sale of certain assets," Williams said in an announcement.

ETE and WMB are due in chancery court in Delaware on June 20 to resolve a tax issue related to the deal. ETE, which has buyer's remorse and has tried to quash the deal, has said it sees the tax issue as a deal-breaker. WMB has said it is committed to closing.

Each company is suing the other (see Daily GPIMay 16). A vote by Williams shareholders is scheduled for June 27. Under current deal terms, closing is required by June 28 or the agreement expires. On Wednesday Williams warned that it could cut its dividend if the deal fails.

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