May 16 (Reuters) - The war of words between U.S. pipeline operators Williams and Energy Transfer Equity (ETE) has worsened after Williams filed a lawsuit to pressure its would-be buyer to proceed with their merger agreement.
Williams has accused ETE of trying to get out of the $20 billion deal and filed a lawsuit late on Friday seeking to prevent the Dallas-based firm from terminating its takeover over a tax issue or if the deal isn't closed by a June 28 deadline.
Williams said in a statement that ETE has used "delay and obstruction" to try and wriggle out of its agreement but ETE responded on Sunday by saying the lawsuit was an attempt to gain leverage in any future deal talks between the two companies and would delay any progress.
"ETE is disappointed that Williams, rather than seriously engaging in discussions regarding the existing transaction, has chosen to file a third separate lawsuit in the last six weeks regarding our pending merger," Kelcy Warren, the chief executive of ETE, said in a statement.
Williams declined to comment.
The lawsuit is the latest twist in what has been a testy transaction almost from the get-go.
Dallas billionaire Warren set his sights on Tulsa, Oklahoma-based Williams last year to transform his empire into one of the world's biggest pipeline networks, launching an unsolicited bid in June and reaching a deal in late September that was then worth around $33 billion.
The timing was poor. Oil and gas prices dropped significantly after it was announced, the companies' shares dropped sharply and investors started to worry that the $6 billion cash portion of the deal would saddle ETE with too much debt.
But the Williams' board, which was initially split on the transaction, came out in support of the deal as oil prices spiralled further south.
TAX ISSUE
Warren said on Sunday that circumstances had changed since the companies struck their deal, and suggested that Williams' board should revisit its recommendation that shareholders vote in favor of the merger.
Warren said that Williams has prevented ETE from reaching out to its board and did not respond to its requests before filing the latest lawsuit.
In recent weeks, ETE has said that it can't complete the acquisition because its lawyers can't guarantee that the deal will be a tax-free transaction for Williams shareholders. Obtaining a favorable opinion on the tax issue from Energy Transfer's lawyers is a requirement for the deal to close.
Williams has said it disagrees with the lawyers' assessment of the tax risks. It has remained steadfast to the original terms.