What Analysts Recommend for Energy Transfer Equity and Williams

The Latest News in the Energy Transfer–Williams Merger Saga

(Continued from Prior Part)

SEC declared Form S-4 effective

Energy Transfer Equity’s (ETE) counterclaims came immediately after the SEC (Securities Exchange Commission) declared that a Form S-4 filed in relation to the merger was “effective.” Few investors believed the merger could happen following this news, and the merger arbitrage spread between Energy Transfer Equity’s and Williams Companies’ (WMB) shares narrowed. ETE and WMB shares have traded at a significant arbitrage spread since the merger announcement in September due to uncertainties surrounding the merger.

What’s next?

Williams Companies has scheduled a shareholder meeting for Williams stockholders to vote on the transaction with ETE on June 27. Before that, the parties will confront each other in court on June 20. Both ETE and WMB stand to lose from the transaction, and they’re trying their best to terminate the deal through the legal route in order to avoid any termination fees. Either party can walk away from the transaction if it doesn’t close by June 28.

Analysts’ targets for ETE and WMB

At a broader level, 54.6% of analysts rate Energy Transfer Equity a “hold,” 36.4% rate it as “buy,” and the remaining 9.1% rate it a “sell.” The median target price of $14 for ETE implies a 27.2% price return in the next 12 months from its May 26 closing price of $11.0. WMB has a “hold” rating from 46.2% of analysts. ETE’s pees EQT GP Holdings (EQGP), Western Gas Equity Partners (WGP), and EnLink Midstream LLC (ENLC) have “hold” ratings from 53.9%, 75%, and 66.7% of analysts, respectively.

Browse this series on Market Realist:

• Part 1 - Must-Know: Energy Transfer Moves to Terminate Williams Merger