Doubled up today. Seems fair value is 4% yield, maybe more, $23.50. Still think this could be a great bet on NE gas over next three years.
Seems today would be a good day to buy, 94 cents at 3%, yield not unreasonable for the growth, $31 value, probably buy at $21??
Guess that each broker has its own deadline. Schwab's was yesterday, think someone said Fidelity today. So you buy with the assumption of the merger closing, you get $18+ vs $23+ assuming a ETE price post closing. You are right seems WMB should be weak tomorrow but like everything else with this deal, no one understands what they are doing.
Was going to buy some more WMB today but Schwab cutoff for payment election was yesterday, if I read the S4 correctly, looks like the default is all stock. Probably a small risk but ?
Too big for PE. WPX coverage last q was 102%, this quarter cash flow should be better. Think WMB could lower div and with comm price recovery, would look like a good bet couple of years out.
Don't see a buyer out there, PSX could do it, has good balance sheet and wants more midstream investment. Not sure how it works with agreement, the $1.5 b penalty still in effect for year if deal doesn't go through. Everyone in the industry would love to own Transco but the value of WMB is depressed because of the deal, selling now to someone else doesn't make sense. Would think the WPZ roll up would be back on table but again doesn't make sense with WMB current value, but would guess that would be next move a year from now. Who knows but if they had rolled up WPX, WMB might have been trading at $40 now. This merger has been a mess for both cos. They need to move on. Don't really think either side gets penalty or damages. MPC could do it but the concentration in the NE might be an issue and MPC doesn't have the balance sheet that PSX has.
Comments from Street article. I'm not sure there is a good short term trade. The market is betting overwhelmingly on no deal, 45% spread. Seems a short of ETE would be a good bet if you thought that WMB prevails.
Have thought all along that ETE would win, but it is almost unbelievable that the head of tax didn't understand the deal for six months after the offer was accepted. A paradox, he should be fired but if ETE prevails, will probably get a multi million $ bonus and lifetime security. Warren dodges this bullet. I don't short but am thinking about selling ETE today, don't want to be partnered with him. This has been a mess, still is. Still think WMB will look like a good bet a couple of years from now but doesn't help the short term uncertainty.
Williams is going to appeal, a risk arbitrageur said. The court was dealing at trial with a tax issue that it may
not have grasped, he said. Latham presented that they were acting impartially, but the Delaware Supreme Court, to which Williams would appeal might not accept that position as easily as the Chancery Court seems to be doing, the arb said.
Success on an appeal might not be a good bet, another arb said. At this stage there is a view that Williams should trade at $20 to $21 on a stand-alone basis. It's also a bet that Energy Transfer will trade up if the Delaware Court decides in its favor, so the trade might be to be long both Williams and Energy Transfer at this juncture, the arb said.
pj, spread is 40%. I viewed yesterday as positive for WMB, I don't want the merger. I don't think WMB is trading based on long term value with the lawsuit, deal uncertainty. WMB has not really given us guidance and couldn't talk up their prospects standalone. Could be wrong, but think their prospects are fairly good with recovery of comm prices. WPZ coverage was 102% last quarter and prices have improved a bunch. Traveling for next couple of days so can't keep up with the machinations, and I've decided to hold for long term so not much to do but wait it out.
Still think WMB has the best assets in the sector with Transco and NE g and p, good connectivity with rest of basins. $30+ value selling for $21, will cut div guessing a buck, use KMI yield of 2.7, and you have a $37 value. WMB is a bargain if you believe the deal dies, I do, ETE prevails in tax opinion.
Agree, would expecting it to sink further based on news flow. That's why I don't trade. Seems ETE is the easy bet if you don't see a close. WMB focus would be on div guidance. That shouldn't take long. But would expect it to move slower. ETE value $18 and WMB $30. Right away couple of dollars for both, more subdued for WMB pending forecast. Assumes oil doesn't crater. Deal done, ETE to $10. I've about decided that I'm going to keep both through the transition. Still think both scenarios would be good bet three years from now. Still lean to WMB assets, Transco, NE assets.
That is a good question, this guy has been touted as tax guru of the MLP industry but it does seem they may have the right position. ETE is way too complicated, a reason to not merger, further complication.
left, any thoughts on the spread, seems contradictory to news flow that would lead you to believe that it's going WMB's way. What do the arbs know?
Seems a stretch that he didn't know the structure of the deal six months after but who knows. Have heard comments from KW on cc's about Whitehurst being the tax guru of the industry. I still think ETE might prevail. ETE is definitely too complicated for my comfort.
left, there is a Reuters release, can find it on the Yahoo page, explanation on the interpretation of the exchange.
Whitehurst said he thought that the ETC stake ETE would receive would depend on the price of ETE partnership units - in other words, that the exchange ratio on that part of the deal was floating. In reality, the exchange ratio was fixed. When he discovered his error in March, he called Fenn and Laurence Stein, his tax lawyers at Latham, who did a thorough investigation of the issue and concluded they could not opine that the
deal should qualify for tax-free treatment to ETE, a condition of the merger. Whitehurst at one point seemed to suggest that he diagrammed the structure of the transaction for the first time in March.
left,I didn't present it very well, speculating that it doesn't close either way. He wins or he loses and settles. Will see what happens today but a 20% spread seems an easy bet if one is convinced of a close.
pj, I'm don't have much skill explaining the short term moves or the move in forecasting the comm prices over the last year. May be wishful thinking on my part, but does seem that at some point too much cash makes the deal not a taxable exchange, I'm not a tax lawyer. As someone said, his motive probably doesn't matter if he has a defensible position on the tax opinion. The move down in ETE yesterday, could that be more arb activity. Seems if the market saw a close, we wouldn't have a 20% gain a few days away. One thing I've learned from this is the media only gets it right occasionally and they are always looking for sensation. If Warren loses, would lose his income potentially for next couple of years, pressure to settle, seems it might be a bunch. But what do I know. I was going to sell a bunch of WMB last summer and got greedy with this merger potential. What's the saw, never wrong, just early. One thing you can't take away from WMB is the quality of there assets. That should prevail in the long term. What is you call?