Billionaire oilman Kelcy Warren is not commenting publicly about his decision this week to back out of what started as a $38 billion merger of his Energy Transfer Equity company in Dallas with Tulsa-based Williams Companies.
But others are, according to a report in the Bloomberg News after ETE announced early Wednesday morning it was terminating the agreement announced last fall. Things changed drastically for ETE after the merger announcement in September 2015—namely oil prices. They plunged from more than $100 a barrel before the merger announcement to less than $30 a barrel. It left Warren’s ETE cash strapped as the deadline approached to formalize the merger.
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Bloomberg News now calls the deal “his most ambitious misstep.” It also said the result “put a harsh spotlight on his methods and motives, and spurred concern over whether his company, Energy Transfer Equity LP, will be able to pull off other deals anytime soon.”
Quoting Tob Thummel, a managing director at Tortoise Capital Advisors LLC, “Now with this saga, this circus, whatever you want to call it, that may switch from being a Kelcy premium to a discount.”
The messy deal also had negative results for ETE as Moody’s Investors Service lowed to negative from stable the outlook for both Energy Transfer Equity and Energy Transfer Partners LP. Moody’s cited higher debt levels at the two companies and “the potential litigation fallout emanating from ETE’s recently terminated bid.”