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Williams (WMB) and Energy Transfer Equity in Legal Tussle

Williams Companies, Inc.WMB, a premier energy infrastructure provider in North America, has accused Energy Transfer Equity LP ETE and its chief executive officer Kelcy Warren of violating their merger agreement by making a private convertible preferred share offering to the latter’s top investors.

The company has sued Warren, who holds a 31.5% stake in Energy Transfer’s units, in the district court of Dallas County, TX. Warren has been accused of having devised this special offering to guard his own financial interests in the company. Additionally, Williams initiated litigation against Energy Transfer in the Delaware Court of Chancery stating that the offering effectively protects Warren and other top shareholders from a cut in distributions by the partnership.

Tulsa, OK-based Williams Companies reported that the litigation is intended to protect the interests of its stockholders and enable them to receive their due consideration under the merger agreement.

The company remains committed to complete the $14 billion deal initiated on Sep 28, 2015 provided that investors of both parties are treated fairly and impartially. The deal is yet to be approved by Williams Companies’ shareholders.

Notably, the prolonged drop in oil and gas prices has caused the firms to shed a combined $37 billion in market value and shares of both companies to plunge more than 60%. This has made the deal more difficult to finance and thus, made investors highly skeptical about the deal’s closure.

Williams Companies is one of the largest domestic transporters of natural gas by volume. The company’s core operations include finding, producing, gathering, processing, and transportation of natural gas.

Williams Companies currently carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Some better-ranked players in the energy sector include Cheniere Energy Partners LP Holdings, LLC CQH and Dominion Midstream Partners, LP DM. Both these stocks sport a Zacks Rank #1 (Strong Buy).

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ENERGY TRAN EQT (ETE): Free Stock Analysis Report
WILLIAMS COS (WMB): Free Stock Analysis Report
CHENIERE EP LP (CQH): Free Stock Analysis Report
DOMINION MIDSTR (DM): Free Stock Analysis Report
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