Kelcy Warren’s $18 billion plan to merge two of his companies is under attack by a small group of shareholders.
Since Warren’s Energy Transfer companies announced last month plans to merge pipeline companies Energy Transfer Partners and Regency Energy Partners, six separate shareholder suits have been filed in federal court.
They aim to question how much Warren is paying out shareholders for Regency. He has offered $26.89 a share in cash and stock in Energy Transfer Partners, a 13 percent premium over the closing price the Friday before the announcement.
But as a suit by shareholder Edwin Bazini earlier this month points out, that price falls below the 52-week high of $33.57 and what some analysts believe the stock is worth.
Energy Transfer declined to comment on the litigation.
A lot is hinging on the Regency deal. Wall Street has been hammering Warren for years over the complexity of his corporate structure, which avoids corporate income tax by diverting the liability to shareholders — a common practice in the pipeline industry.
Lawsuits during such high-dollar deals are commonplace, as shareholders fight to extract a larger sale price for their stock.
And the shareholders are going after the complexity issue as well, pointing out that two Regency board members have positions across multiple Warren companies, muddying their interests.
“(Energy Transfer Equity)’s and (Energy Transfer Partner)’s interests are not aligned with Regency’s other public unit holders because ETE and ETP likely acquired a significant portion of these units below market price,” Bazini’s lawsuit reads.