Energy Transfer Equity and Williams Cos Deal Falls 92% below Expectations

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When Energy Transfer Equity LP bought Williams Cos in the fourth quarter of 2015, the firm estimated the acquisition would boost earnings by $2 billion a year. However, last week the midstream company released a statement reducing that estimate to $170 million annually instead, significantly lowering expectations by the sum of 92 percent.

Since the companies agreed to a deal late last September, the value of each firm has dropped more than 50 percent because of natural gas prices falling more than 30 percent. According to Timm Schneider, an analyst at Evercore ISI, “That’s a “massive reduction” in expected synergies that comes as a “huge surprise.”

Energy Transfer states that it plans to close offices and reduce Williams presence in Oklahoma City and Tulsa. Departments most affected will be accounting, finance, engineering, legal, construction, information technology, and human resources.

Williams stated by via email, “We believe the transaction with ETE is in the best interests of stockholders and intends to consummate the transaction following receipt of stockholder approval.”

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