Why ISS Recommends Williams To Vote For $20B Deal With ETE?

Shareholders of Williams Companies Inc. (NYSE:WMB) have got a recommendation from premier independent proxy voting and corporate governance advisory player Institutional Shareholder Services Inc. (“ISS”) to vote in favor of the merger accord with Energy Transfer Equity LP (NYSE:ETE) .

According to ISS, the shareholders of Williams will benefit from the $20 billion deal closure as the combined company will have a significant upside potential on an increased customer base and higher cash flows.

It is to be noted that Williams’ shareholders will vote for the pending merger on Jun 27. Under the current terms, the merger will fall though if it is not closed by Jun 28, 2016.

Alongside, on Jun 20 the deal will be placed before the Delaware Chancery Court. The court will listen to both Williams and Energy Transfer Equity and will try to analyze where the players have failed to complete the accord. In the meantime, Williams and Energy Transfer Equity deal was recently approved by the U.S. Federal Trade Commission, subject to certain conditions.

Most importantly, although Williams is trying to get the deal closed, Energy Transfer Equity is reluctant. The cash portion to buy Williams has become troublesome for Energy Transfer Equity as natural gas price has slipped since the deal was declared last September. Hence, it can be said that concerns expressed by Energy Transfer Equity that the deal had not secured the necessary legal opinion to make it tax-free to shareholders is merely an excuse.

Tulsa, OK-based Williams is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing, and transportation of natural gas.

Currently, the company 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. Williams’ rival Energy Transfer Equity also has a Zacks Rank #3.

Some better-ranked players in the energy sector include Enbridge Inc. (NYSE:ENB) and Boardwalk Pipeline Partners, LP (NYSE:BWP) . Both players sport a Zacks Rank #1 (Strong Buy).