Delaware Chancery Court Rules that Energy Transfer Can Terminate Merger Agreement with Williams

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The Delaware Court of Chancery has issued an opinion finding that Energy Transfer Equity, L.P. may terminate its merger agreement with The Williams Companies, Inc. in the event that the company’s counsel, Latham & Watkins LLP, is unable to deliver a required tax opinion prior to the June 28, 2016 outside date in the merger agreement.

The Chancery Court’s opinion stated:

“Because I conclude that Latham, as of the time of trial, could not in good faith opine that tax authorities should treat the specific exchange in question as tax free under Section 721(a); and because Williams has failed to demonstrate that the Partnership has materially breached its contractual obligation to undertake commercially reasonable efforts to receive such an opinion from Latham, I find that the Partnership is contractually entitled to terminate the Merger Agreement, assuming Latham’s opinion does not change before the end of the merger period, June 28, 2016.”

The Chancery Court’s ruling is subject to appeal.

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