Williams Being Acquired?

[swake]

New filing by ETE today and it's not good news.

ETE and WMB have also been analyzing other steps to reduce general and administrative expenses. ETE has determined that it will be necessary to consolidate corporate offices and headquarters of ETE and WMB in Dallas, Texas in order to achieve the appropriate overall reduction in general and administrative costs for the combined company and headquarters and, as a result, the current presence of WMB in Tulsa, Oklahoma and Oklahoma City, Oklahoma will need to be significantly reduced, particularly with respect to the finance, accounting, engineering and construction, legal, human resources and information technology functions, or potentially eliminated. 


http://www.sec.gov/Archives/edgar/data/1648098/000119312516514627/d80568ds4a.htm 

According people I know there, this was always going to be what happened. This isn't actually new.

But, also it's less and less likely the deal happens.

[Conan71]

According people I know there, this was always going to be what happened. This isn't actually new.

But, also it's less and less likely the deal happens.

I had read somewhere that they were beyond the point of no return, that ETE would rather get out of this but cannot at this point.  I mentioned that to a friend today and he said shareholders have not signed off yet.

Anyone know if that's the case?

[Hoss]

I had read somewhere that they were beyond the point of no return, that ETE would rather get out of this but cannot at this point.  I mentioned that to a friend today and he said shareholders have not signed off yet.

Anyone know if that's the case?

From what I read and heard on the news today, that is the case.

[LandArchPoke]

I had read somewhere that they were beyond the point of no return, that ETE would rather get out of this but cannot at this point.  I mentioned that to a friend today and he said shareholders have not signed off yet.

Anyone know if that's the case?

Correct. Shareholders still have to vote. If they vote no, which several major shareholders have voiced they will be voting no (that doesn't happen often on mergers/acquisitions) Williams would then be on the hook for $50 million + in expenses to ETE.

The biggest question still remains - where is ETE going to raise $6 billion in cash at this point to complete the deal? The equity/debt markets are f***** for energy businesses and ETE's market cap now is about $7 billion. They just did a public offering to help raise cash and barely raised $200 million. They looked into selling Sunoco (which they did the same thing with Sunoco they will do with Williams - moving the staff to Dallas and keeping the legal headquarters elsewhere), but Sunoco was only valued at $2 billion.  

This entire thing is just mind blowing in how horrible the deal is for both companies and they are just driving the ship straight into the iceberg. A few people on Williams board are about to get very wealthy from the cash buyout portion. ETE/Williams will likely be on the auction block in bankruptcy in by the end of 2018 if the deal isn't redone or cancelled somehow.

WPZ will retain it's headquarters address in Tulsa. WMB however will be gutted. This means probably 80%-90% of the Oklahoma staff will be gone so ~700 in Tulsa is my guess.

Just another mind blowing thing is ETE will OWN Williams Center... meaning no lease payments. But hey, let consolidate, pay people to move to Dallas, and lease $30-40 per sq. ft. office space in Dallas.... brilliant business move when you're trying to save money. Over 10 year for 100,000 sq. ft. is about $40-50 million in lease costs!! They could consolidate the Houston, OKC, Pittsburg offices into Tulsa and save probably $200 million in lease costs by having everyone in a property they ALREADY OWN! Dumb, dumb, dumb... and Tulsa is down another Fortune 500 company, just sickening.

OH! And another interest tid-bit. That $2 billion in synergy & savings they raved about in this deal? Well now they're saying it will only be about $150-200 million in savings... What? Talk about fraud.

[davideinstein]

How do board members and hedge funds have this much power over the economy of a city? I feel like a community should have legal ground to stop something like this if it's going to hurt their economy on such a large scale.

[erfalf]

They were eliminating a competitor, pure and simple. Ill conceived at this point, but enough people obviously thought it was worth it.

[cynical]

No, they were buying tangible assets plus customer relationships. They were always going to eliminate redundancies. That's how mergers and acquisitions work. Because the two companies' employees had similar knowledge bases, ETE concluded that it can operate the combined assets without most of the Williams employees. They'll probably retain only the employees who directly managed Williams' customer relationships. It looks like every other merger/takeover, but on fast-forward. Sooner or later, this was how it was going to play out. It turns out to be sooner rather than later.

They were eliminating a competitor, pure and simple. Ill conceived at this point, but enough people obviously thought it was worth it.

[DowntownDan]

Correct. Shareholders still have to vote. If they vote no, which several major shareholders have voiced they will be voting no (that doesn't happen often on mergers/acquisitions) Williams would then be on the hook for $50 million + in expenses to ETE.

The biggest question still remains - where is ETE going to raise $6 billion in cash at this point to complete the deal? The equity/debt markets are f***** for energy businesses and ETE's market cap now is about $7 billion. They just did a public offering to help raise cash and barely raised $200 million. They looked into selling Sunoco (which they did the same thing with Sunoco they will do with Williams - moving the staff to Dallas and keeping the legal headquarters elsewhere), but Sunoco was only valued at $2 billion.  

This entire thing is just mind blowing in how horrible the deal is for both companies and they are just driving the ship straight into the iceberg. A few people on Williams board are about to get very wealthy from the cash buyout portion. ETE/Williams will likely be on the auction block in bankruptcy in by the end of 2018 if the deal isn't redone or cancelled somehow.

WPZ will retain it's headquarters address in Tulsa. WMB however will be gutted. This means probably 80%-90% of the Oklahoma staff will be gone so ~700 in Tulsa is my guess.

Just another mind blowing thing is ETE will OWN Williams Center... meaning no lease payments. But hey, let consolidate, pay people to move to Dallas, and lease $30-40 per sq. ft. office space in Dallas.... brilliant business move when you're trying to save money. Over 10 year for 100,000 sq. ft. is about $40-50 million in lease costs!! They could consolidate the Houston, OKC, Pittsburg offices into Tulsa and save probably $200 million in lease costs by having everyone in a property they ALREADY OWN! Dumb, dumb, dumb... and Tulsa is down another Fortune 500 company, just sickening.

OH! And another interest tid-bit. That $2 billion in synergy & savings they raved about in this deal? Well now they're saying it will only be about $150-200 million in savings... What? Talk about fraud.

I have a funny feeling that ETE is trying to make Williams pull the plug so they don't have to do it themselves.  Hence, a bombshell about destroying the Tulsa office knowing that it'll create a buzz to push them towards cancelling the deal.  Both sides are cowards and need to admit they screwed up and agree to a mutual walk-away.

[Conan71]

I have a funny feeling that ETE is trying to make Williams pull the plug so they don't have to do it themselves.  Hence, a bombshell about destroying the Tulsa office knowing that it'll create a buzz to push them towards cancelling the deal.  Both sides are cowards and need to admit they screwed up and agree to a mutual walk-away.

And that is truly what needs to happen.

With gas now trading at $1.80/mcf, and the situation Williams has with Chesapeake, it would be a really good idea for everyone to walk away right now.

[johrasephoenix]

I can't imagine why company management would be for this... their jobs will go *poof* and shares will be transferred into worthless ETE stock that will go bust within a year or two. 

This merger is being pushed by far away hedgefunds that took control of Williams board a few years back.  This will enrich them while destroying ETE and Williams in the process.  It will take down thousands of jobs in Tulsa, OKC, and Dallas. 

ETE's corporate structure also suggests they are some shifty dudes....  Those books are more complicated than AIG's circa 2006.   

[swake]

I have a funny feeling that ETE is trying to make Williams pull the plug so they don't have to do it themselves.  Hence, a bombshell about destroying the Tulsa office knowing that it'll create a buzz to push them towards cancelling the deal.  Both sides are cowards and need to admit they screwed up and agree to a mutual walk-away.

This is the deal, if Williams kills the deal they owe ETE $1.48 billion, if ETE kills the deal they owe Williams a couple of billion dollars and from what I have read ETE doesn't have that much cash. This is now all about who pays who to kill the deal.

I agree ETE may just be hoping that Williams shareholders kill it outright so they don't owe Williams billions of dollars and that's the reason for this filing.

[heironymouspasparagus]

How do board members and hedge funds have this much power over the economy of a city? I feel like a community should have legal ground to stop something like this if it's going to hurt their economy on such a large scale.

35 years of deregulation and "free market" Voodoo economics.

[PonderInc]

The $1.5 billion penalty only kicks in if the Williams board backs out. (Which is why you keep hearing Williams say that they are moving forward as planned.  They have to.).  That's different than if the WMB shareholders vote it down.  I believe the penalty for that would be more like $50 million.  Sounds like a bargain to me.

[DTowner]

This is the deal, if Williams kills the deal they owe ETE $1.48 billion, if ETE kills the deal they owe Williams a couple of billion dollars and from what I have read ETE doesn't have that much cash. This is now all about who pays who to kill the deal.

I agree ETE may just be hoping that Williams shareholders kill it outright so they don't owe Williams billions of dollars and that's the reason for this filing.

It sounds like a dangerous mix of a game of chicken combined with giant egos, and bad economic incentives. 

[Weatherdemon]

Williams Cos. sue ETE, Kelcy Warren over stock offering


Williams Cos. announced Wednesday morning that it is commencing litigation against ETE and Kelcy Warren in response to the private offering of Series A Preferred Convertible Units that the Dallas company disclosed it was making available to certain of its preferred unitholders on March 9.
The lawsuit against ETE in the Delaware Court of Chancery seeks to unwind the private offering, according to the news release.
The litigation against Kelcy Warren in the district court of Dallas County, Texas, is for tortious, or wrongful, interference with the merger agreement executed on September 28, 2015, as a result of the private offering of Series A Convertible Preferred Units.
Casey Smith 918-732-8106
casey.smith@tulsaworld.com