Decision hinged on tax opinion from Latham & Watkins LLP
After months of corporate wrangling, court actions and contested negotiating, a Delaware judge ruled on June 24, 2016 that Energy Transfer Equity (ticker: ETE) could withdraw from its merger agreement with The Williams Companies (ticker: WMB).
In a press release issued June 29th, Energy Transfer Equity, L.P. announced that it had terminated its merger agreement with The Williams Companies, Inc. effective immediately. This followed Monday’s special meeting of Williams shareholders, at which the majority of votes were cast approving the merger of Williams into ETE.
In its release, ETE said: “As previously announced, on Friday, June 24, 2016, the Delaware Court of Chancery issued an opinion finding that ETE is contractually entitled to terminate the merger agreement with Williams in the event ETE’s counsel Latham & Watkins LLP were unable to deliver a required tax opinion prior to the June 28, 2016, outside date in the merger agreement.
“Latham advised ETE that it was unable to deliver the opinion as of the outside date. Consistent with its rights and obligations under the merger agreement, ETE subsequently provided written notice terminating the merger agreement due to failure of conditions under the merger agreement, including Latham’s inability to deliver the required tax opinion, as well as the other bases detailed in ETE’s filings in the Delaware lawsuit referenced above.”
Williams then issued its own statement on Wednesday June 29th, following the announcement by ETE:
“Williams does not believe ETE had a right to terminate the Merger Agreement because ETE breached the Merger Agreement by (among other reasons) failing to cooperate and use necessary efforts to satisfy the conditions to closing, including delivery of Latham & Watkins LLP’s Section 721(a) tax opinion.
“Accordingly, on June 27, 2016, Williams filed an appeal with the Delaware Supreme Court in connection with the Delaware Court of Chancery’s June 24, 2016 ruling relating to the Merger Agreement between Williams and ETE.
“Williams recognizes the practical fact that ETE has refused to close the merger. Williams has concluded that it is in the best interests of its stockholders to seek, among other remedies, monetary damages from ETE for its breaches. So, while taking appropriate actions to enforce its rights and deliver benefits of the Merger Agreement to its stockholders, Williams will renew its focus on connecting the best natural gas supplies to the best markets,” the company said in today’s press release.
