Vivian D. Labbe
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Vivian D. Labbe in Mergers & Acquisitions,

There's Something Weird Going on With the Energy Transfer-Williams Co Merger

In September 2015, Energy Transfer Equity LP  and Williams Companies Inc  announced a $37.7 billion deal to combine, which priced Williams shares at $43.50. However, that merger may have reached an impasse.

A source close to the matter told Benzinga the deal is no longer happening. This follows issues related to a tax opinion from Energy Transfer lawyers related to the deal, along with questions surrounding the departure of Energy Transfer CFO Jamie Welch and valuation concerns, the source added.

Williams Co said it has no comment on market speculation and referred Benzinga to its April 14, 2016 press release, which restated the Board's expectation of a deal happening.

Energy Transfer Partners did not return emails or calls as of the time of publishing.

Last official word from the companies suggested the deal would close in Q2'16.

At Least One Analyst Is Skeptical

Benzinga contacted RF Lafferty's Jaime Perez and asked him what he thinks of the prospects of a deal. Neither company is a part of his coverage universe, but Perez does track the space and covers other companies within it.

Perez told Benzinga he listened to the September 2015 conference call when Williams announced its deal with ETE. Perez recalled that the call appeared to show some investor concern over the deal.

Perez said feedback showed Williams investors' lack of a positive response to the news, adding that the deal is "not a clean acquisition."

A History Of Media Back And Forth

In early February, DealReporter said Energy Transfer Partners would follow through with the deal for Williams.

Later in the month, during the last week of February, the New York Times reported Energy Transfer Partners was considering nixing the agreement.

What Does This Mean For Investors?

In the midst of this back and forth reporting over the last couple of months, shares of both stocks have rallied since their lows set on February 8.

According to the latest M&A spread data by Sin Letter, the largest difference between a current deal price and market price is the 122 percent gap between Williams' buyout price and its current trading range.