8-KMaterial AgreementsExhibits & Filings

Energy Transfer LP 8-K Report, Material Agreement (Sep 29, 2015)

Filed September 29, 2015For Securities:ETET-PI

Summary

This 8-K filing announces a significant definitive agreement between Energy Transfer Equity (ETE) and The Williams Companies, Inc. (WMB) for a merger. ETE's subsidiary, Energy Transfer Corp LP (ETC), will merge with WMB, with ETC surviving. WMB stockholders will receive a mix of cash and ETC common units, or an all-cash or all-stock option, subject to proration. The transaction also involves a concurrent merger of ETE's general partners and a contribution of WMB's assets to ETE. This move is strategically aimed at combining the businesses of ETE and WMB to create a larger, integrated energy infrastructure company. A notable feature of the deal is the inclusion of contingent consideration rights (CCRs) attached to ETC common shares issued to WMB stockholders. These CCRs will provide a payout to WMB stockholders if the trading price of ETC common shares underperforms ETE common units over a specified period after the merger closes. The deal is subject to customary closing conditions, including WMB stockholder approval and regulatory clearances. ETE has also secured a $6.05 billion bridge loan commitment to help finance the transaction. This filing marks a crucial step in what appears to be a transformative acquisition for Energy Transfer.

Key Highlights

  • 1Energy Transfer Equity (ETE) enters into a definitive Agreement and Plan of Merger with The Williams Companies, Inc. (WMB).
  • 2The transaction involves WMB merging with ETE's subsidiary, Energy Transfer Corp LP (ETC), with ETC surviving.
  • 3WMB shareholders will have the option to receive a combination of cash and ETC common units, all cash, or all ETC common units, subject to proration.
  • 4Contingent Consideration Rights (CCRs) are attached to ETC common shares, providing potential additional value to WMB shareholders based on future ETC stock performance relative to ETE units.
  • 5The deal is contingent on WMB shareholder approval and receipt of necessary regulatory approvals.
  • 6ETE has secured a $6.05 billion bridge commitment to finance the cash portion of the merger consideration.
  • 7The Merger Agreement includes termination fees for certain scenarios, including WMB accepting a superior proposal or ETE due to a change in WMB's board recommendation.

Frequently Asked Questions

This 8-K filing announces the entry into a material definitive agreement for a merger between Energy Transfer Equity (ETE) and The Williams Companies, Inc. (WMB). Essentially, it signals a major acquisition where ETE, through its subsidiary ETC, is set to acquire WMB.

WMB shareholders have election options. They can receive $8.00 cash and 1.5274 ETC common units, or elect for entirely ETC common units (1.8716 per WMB share), or opt for $43.50 in cash per WMB share. However, the all-cash and all-stock options are subject to proration to ensure the total cash and stock paid are consistent with the mixed consideration option.

CCRs are rights attached to the ETC common shares issued to WMB stockholders. If, over a specific measurement period after the merger, the average trading price of ETC common shares is lower than that of ETE common units, ETC will make a one-time payment to compensate for the difference. This payment can be in cash or ETC common shares, at ETE's election. If ETC's stock performs better, these CCRs expire worthless, and ETC may even return some ETE units.

The completion of the merger is subject to several conditions. These include the approval of the merger by Williams Companies' stockholders, receiving required regulatory approvals (such as under the Hart-Scott-Rodino Antitrust Improvements Act), and the effectiveness of a registration statement for the ETC common shares being issued. Both parties also have specific termination rights under certain circumstances.