Williams (WMB) May Cut Dividend In Case ETE Merger Flops

Williams Companies Inc. (NYSE:WMB) has given a warning to its shareholders that it might opt for reducing third-quarter dividend if its merger with Energy Transfer Equity L.P. (NYSE:ETE) falls through. The company also came up with its second-quarter dividend of 64 cents, in line with the first quarter.

Last September, Williams agreed to being acquired by Energy Transfer Equity. In fact, the deal was estimated to get closed by the first half of 2015. However, both players are in a legal tussle, suing each other for months. Recently, Williams filed a suit against Energy Transfer Equity to ensure that their merger remains on track. The company took the legal step when Energy Transfer Equity expressed concerns over the merger, citing that the deal had not secured the necessary legal opinion to make it tax-free to shareholders. Most importantly, according to Williams, Energy Transfer Equity deliberately seeks not to close the transaction.

It is to be noted that on Jun 27, the shareholders of Williams will likely vote for the pending merger that Energy Transfer Equity is perhaps trying to break away from due to weak commodity prices.

This dividend slash decision is not new amid weak oil prices. Although the commodity is walking on the bullish path, it is still way below the mid-2014 mark. Other energy players that cut their dividend are National Oilwell Varco, Inc. (NYSE:NOV) and Marathon Oil Corporation (NYSE:MRO) . In fact, SeaDrill Limited (NYSE:SDRL) stopped paying out dividend.

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.


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