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Williams Says Shareholders Approve ETE Merger, Hints at Lawsuit

Despite a judge's ruling that could ultimately nix the deal, The Williams Companies Inc. said more than two-thirds of its shareholders voted for the proposed merger with Energy Transfer Equity LP (ETE), according to preliminary results.

In a statement Friday, Williams also hinted that it would take legal action against ETE if it attempts to scuttle the deal.

On Monday, Williams said approximately 62.3% of its shareholders, representing more than 489 million outstanding shares of stock, voted to receive a cash consideration of $43.50/share, while about 3.2% of shareholders (25.2 million) elected to receive a share consideration of 1.8716 in common shares representing limited partner interests in Energy Transfer Corp. LP (ETC).

An additional 2.9% of shareholders (22.4 million) voted for a mixed consideration, which includes $8.00/share in cash and 1.5274 common shares in ETC.

Williams said about 31.6% of the shareholder vote, at the election deadline last Friday, failed to make a valid election choice.

The vote was held on the same day that a Delaware judge ruled that ETE, which wants to terminate the proposed merger, could legally do so (see Daily GPIJune 24). Delaware Court of Chancery Vice Chancellor Sam Glasscock said ETE did not violate the merger agreement when it failed to receive an opinion from its tax attorneys on a transaction between ETC and ETE.

"While we appreciate the court's consideration of this matter, Williams does not believe ETE has a right to terminate the merger agreement because ETE has breached the [it] by failing to cooperate and use necessary efforts to satisfy the conditions to closing, including delivery of [the] tax opinion," Williams said in Friday's statement.

"Williams remains committed to closing the merger…If ETE attempts to terminate the merger agreement, Williams will take appropriate actions to enforce its rights under [it] and deliver its benefits to Williams' stockholders."

The proposed merger initially was valued at $37.7 billion when it was announced last September, but the collapse in commodity prices had a negative impact, and the deal is now valued at about $20 billion (see Daily GPI, March 24). Investors have since soured on midstream master limited partnerships, and ETE's shareholders have had doubts about the merger (see Daily GPI, Feb. 25; Oct. 22, 2015).

Earlier this month, Williams said the original projection that a merger with ETE would create more than $2 billion in annual synergies by 2020 was inaccurate, and they now are valued at about $126 million (see Daily GPI, June 20; Sept. 28, 2015). Nevertheless, Williams' board of directors have offered its shareholders a special dividend of 10 cents/share should they vote to approve the merger.

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