Park, this has been the deal from hell. Thought it might be good at first, probably wasn't, Warren, MLP form, size.... I own ETE, ETP, WMB and WPZ. Have owned WMB since Enron days. Would pay taxes on sales. Will probably own both in five years. If the deal goes through, the prices will fall but not back to previous prices, maybe $10, WMB value still $20 ish. Deal dies and both go up, ETE $18 and WMB $30 with some div cut and good guidance. Still think WMB assets are better than ETE's but there's are good also. We will know in a week or so. Settlement this Friday??? I still want to own Transco and NE assets, the future of US gas supply. Not too long ago WMB projected $2.85 div this year with WPZ roll up. If you figure with some weakness that could have been around the current $2.56 with 10% haircut. $2.56 DCF x 13x multiple gets you $33 stock price. Comm prices now are better than when the deal was finalized in the fall. I'm a broken record but think both are good values now absent a deal. How does Warren close when he can't get tax opinion.
Thinking about ETE and deal, don't want it and give us negatives to kill it. WMB wants to close, gives us negative info to get a yes vote. Even with a deal and no dist for couple of years, the value will be dependent on e and p activity, nat gas demand, which looks good. Park, the cash $8 will be taxable so you will get some tax loss. WMB value post deal is $23, assuming ETE at $10. Current price of WMB values deal at $9 ETE. Agagain, I don't see much downside in WMB except for maybe some short term churning after it closes, if it does.
Don't see downside to ETE without deal. I would buy both today if Warren weren't an issue, and that could be overdone, he may be acting this way to kill deal.
Midstream cos undervalued, $$70 oil and $3.50 gas next year. More importantly 1.6% 10 yr T note, rates probably say low for few years.
Buy WMB and ETE today.
50% prob, settlement, no close. 30%, positive vote, no close, tax opinion. 20%, all equity deal, 2x. ETE and WMB go up under any scenario. ETE value, $18, WMB $30.
I responded before, didn't print. I'm not sure of anything. Just my humble opinion. Main sticking point is tax opinion. Conv pref plan can be fixed. initially liked deal with the asset footprint, but negatives are debt, Warren, MLP form, ETC security. Do think likely settles before close date or closes in Warren refuses to close. Even with settlement, payment to WMB will be small, WPZ payment, WMB owns 60% of WPZ so the payment was not lost, and WMB wants to support WPZ short term, so no real damage. The loss of the premium was commodity related, not anything ETE and WMB did, except the market doesn't want a deal with the add'l debt.
Am repeating myself, will see what happens. Might buy some more WMB, ETE is probably a good buy if you believe deal doesn't get done, WMB is ok either way. I'm not sure that the motivations of the paries hasn't changed since the deal was struck, we will find out.
At least i knew the $1.5 b penalty didn't apply if WMB owners reject the deal. That's a fairly simple fact. You keep accusing me of a bias to ETE. My WMB stake is several times my ETE stake, have been buying WMB for over a decade, ETE for a few, ETP is much bigger than ETE, and also WPZ. For the record, I didn't like the WPZ rollup, which will probably be back on table after this deal goes away. So I have interest in both cos and the best interest of both is to reject the deal. Warren lacks integrity imo and the WMB board is dysfunctional. The deal will be settled or Warren won't close, you can vote any way you want to but I honestly don't feel the deal as structured is good for the merged company, too much debt, credit ratings are lowered, distribution will be eliminated. So it never makes it to court or Warren doesn't close, it's academic.
Curious how boards devolve into personal attacks after a while. For every trade, there's a difference of opinion.
I could make the case that the WMB board should have recognized that the deal with the add'l debt was not in the best interest of WMB share owners. You could argue unreasonable all day, the court will decide. My guess is neither side wants to let a judge decide, could rule against WMB, and they're out $1.5 billion. WMB wouldn't cooperate in the conv pref plan according to Warren, was that reasonable. I don't think a judge will overturn a tax opinion. And the trading of assets ETE entities, can see where is might be questionable. If I remember from my corp days, you can't even rely on a private letter ruling, wouldn't know you had a problem until the IRS decides against you and no way to put the genie back in the bottle. The deal dies.
The conv pref plan can be rescinded and the merger closes, that's not a big deal. ETE doesn't have any obligation to change the agreement, the same as WMB. I don't think either has breached the agreement so far. Do think ETE maybe has come closer but again the test will be when they don't close because of the tax opinion, I think they have a good case on that one, Latham is big time firm, and again an opinion is an opinion. Opinions are neither right or wrong.
Then ETE can get out without penalty. Why did there stock decline today. Do they have to redo the S4 and redistribute. Seems this would have been mentioned, the fact of no FTC approval and the logical conclusion that closing couldn't be done by 6/27.
That's illogical, the deal is approved, Warren refuses to close and he probably has a good reason in the tax opinion and what damages are there. Still think voting no is best for WMB owners but is probably academic as the institutions will approve it. If Warren is forced to close, the merged co has $6 billion of add'l debt, not good for either side. Again the couple of dollars of premium evaporates.
I hope your scenario would come out, ETE at $14ish gets a WMB $30 value Absent the Warren factor, I'd take that. Doesn't seem realistic.
So you don't think ETE would fall with merger closed, no dist and $6 billion in add'l debt. I can see why you want the merger to close. It seems to be going down today on the FTC announcement which seems irrelevant.
The deal if I remember correctly, ETE did not make FTC changes a deal killer, they would accept the FTC ruling and close. Most were expecting this so no surprise.
pj, you are right, the futures show $3.08 avg next year, could be $3.50. Fundamentals for gas look great and most of it comes from NE, Williams stronghold. Saw the other day since '11, NE gas is up from 6 to 24 bcf/d and rest of country is down a few bcf, and power generation, people are talking 30 bcf of add'l demand. Again, you can see why Warren wanted Transco and Williams g and p assets in the NE. Hamm, CLR, said now he thinks $70 oil by end of year. No one has a perfect crystal ball, but absent something unknown out of the ME, we could have a big under supply of oil next year. Good for NGLs and Williams. Also good for ETE. Good for all of the g and p cos. Have been buying TEGP because of their REX pipeline that will now ship gas from NE to west, initially set up for west to east flow, the 1.8 bcfd one way could be 6bcf/d bi directional flow.
PAGP will do well filling pipes with no capex. We just need this merger from hell to be put to rest. Neither co should want the deal.
From ETE board. The problem with journalists, reaching wrong conclusion. I view it as a good omen for WMB, Warren won't close. I really don't care about a couple of dollars of profit in a bad merger. ETE falls to $10 with dist elim and ETC is $9, WMB value is $22. The assets together make sense, Warren's control, the MLP form and the ETC vehicle, don't. WMB board should not want this deal except they have the two activists that have been scorched and want to make back a few short term dollars. IMHO, the WMB board has done a lousy job.
It was on Dow Jones Newswires. I was unable to copy and paste the article. The article said WMB was looking for evidence that ETE convinced their lawyers to issue that negative tax opinion. The article surmised that since ETE didn't fight turning over the requested info, ETE had nothing to hide and thus didn't influence their attorneys. The article said it could be a bad omen for WMB. Nothing negative was said about ETE.
Thanks. Seems that would boost ETE, must be that the FTC announcement which is irrelevant is driving ETE down. Probably a good day to buy ETE if you are convinced the deal is dead.
I never said that was the conclusion, I asked if someone saw the source so I could read it. You don't seem to understand my comments. ETE is down today imho because of the FTC approval. I'm not a lawyer and don't claim to be but a tax opinion is just that, an opinion. And Warren can refuse to close if his counsel doesn't give a tax opinion. Williams already said that the deal could be fixed to overcome the tax opinion issue so would assume they had the info before. Not very useful info, kind of like the article saying the break fee is paid with no vote.
Someone mentioned on ETE board that ETE shared with WMB tax opinion info that indicates opinion was not influenced by ETE. Does anyone have a source.
What's the source of the news you're talking about. The FTC approved merger with sale of Gulfstream, Couldn''t find what you are referring to.