Energy Transfer Can Escape Williams Takeover, Judge Rules
25 June 2016 - 7:40AM
Dow Jones News
Energy Transfer Equity LP can escape its deal to buy rival
pipeline operator Williams Cos. after a Delaware judge ruled that
its fears of an unexpected tax bill were genuine and not—as
Williams had argued—a ploy to get out of an acquisition it no
longer wanted.
Vice Chancellor Sam Glasscock III ruled Friday that Energy
Transfer's lawyers weren't deliberately sandbagging the merger when
they said they couldn't deliver a necessary opinion letter on the
deal's tax treatment. The merger agreement requires Energy Transfer
to produce the opinion letter before the deal can close.
Williams had accused Energy Transfer of using the tax issue to
wriggle out of the takeover, which its empire-building chairman,
Kelcy Warren, had come to regret as the oil bust dragged on.
"Motive to avoid a deal does not demonstrate lack of a
contractual right to do so," Mr. Glasscock wrote. "A desperate man
can be an honest winner of the lottery."
The two-day trial this week in the Delaware Court of Chancery
had been closely watched by deal makers far beyond the energy
patch. Buyer's remorse on such a large scale is unusual, and the
fact that this trial hinged on legal opinions and tax structuring,
the critical sausage-making that is often taken for granted in big
takeovers, fanned interest among mergers-and-acquisitions
specialists.
Write to Liz Hoffman at liz.hoffman@wsj.com and Alison Sider at
alison.sider@wsj.com
(END) Dow Jones Newswires
June 24, 2016 17:25 ET (21:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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