An article was published by the New York Times. The article delved into the merger between Energy Transfer Equity and the Williams Companies. The article discussed the ups and downs of the energy crisis and the ups and downs of the merger.
The positive effect of the drop in energy prices can be felt by everyone. It has helped to keep more discretionary money in consumers’ pockets. However, there is a negative side. The article explained how banks, like JP Morgan Chase, have already or will have to increase their reserves because of bad energy loans. Many energy companies have applied for and received large loans, with the assumption that they would easily pay it back. But then the price of energy dropped. The combination of the low energy prices and the high amounts have debt will very likely bring about a third of the companies involved in production and exploration of energy will have to file for bankruptcy. Shell and Chevron have already started letting large numbers of employees because of the dramatic decrease in profit.
The article also discussed the positives and negatives of the merger. One of the biggest downsides of the merger was the doubts that investors had about the merger being too complicated. This, coupled with the lowered energy prices, wrecked the companies’ values and stock prices. They lost a combined value of 37 billion dollars, which is over 60 percent of their worths. And after the release of earnings report, Energy Transfer, alone, lost another billion dollars in value. However, many shareholders that just think that the timing of the merger was not great, but as soon as the energy prices recover, the companies and their value will recover. They are staying positive because they know how natural of a merger it truly is. The merger is currently being reviewed by regulators and if they approve it, and neither side backs out, the merger will go through and Energy Transfer Equity will own the Williams Companies.
There are several firms that are watching this merger closely. One such firm is Madison Street Capital. This investment banking firm stays within the middle market and provides services in five areas. The first area of services that are provided is financial opinions, this includes services such as independent third party fairness opinions and solvency and capital adequacy. The second area is asset management industry focus, which includes areas such as portfolio valuation services and restructuring services. The third area is valuation or financial reporting, which includes services like structured finance products and share-based compensation. The fourth bis business valuation and the fifth area is corporate advisory.
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