As expected, Energy Transfer Equity  (ETE) officially terminated its acquisition of Williams Cos. (WMB - Get Report) on Wednesday due to failure of conditions under the merger agreement, including its law firm's inability to deliver the required tax opinion.

On Friday, June 24, the Delaware Court of Chancery ruled that ETE was contractually entitled to terminate the merger agreement with Williams if its counsel Latham & Watkins LLP wasn't able to deliver the tax opinion before the deal's June 28 deadline. "Latham advised ETE that it was unable to deliver the opinion as of the outside date," ETE said.

Williams said Monday it was appealing the decision and would take "appropriate actions" to enforce its rights under the agreement, including getting a $410 million breakup fee from ETE.

Analysts at Tudor, Pickering, Holt & Co. said Wednesday that the focus now should be on each entity on a standalone basis, with ETE needing to address distribution coverage and leverage issues at its limited partnership Energy Transfer Partners LP and Williams needing to update analysts on growth capital forecasts, cost-cutting efforts and its own distribution policies and those of its master limited partnership Williams Partners (WPZ) .

The analysts said yesterday that Williams screens "cheap" among its large-cap peers and is one of the least expensive companies in the industry. "While some payout revision is likely at WMB and possibly WPZ as well, current ~1x distribution coverage means that a large reduction is not a foregone conclusion," they said.

ETE announced the merger in September for $43.50 per share in stock and cash, or $38 billion, after Williams initially resisted its advances. The deal would have created the largest natural gas gatherer in the U.S.

Goldman Sachs, Citigroup, Bank of America, Deutsche Bank, UBS Group, Credit Suisse, Morgan Stanley, JP Morgan, RBC Capital Markets and Intrepid Financial Partners were advising ETE while Barclays and Lazard were assisting Williams.

Williams shares closed up 3.2% on Tuesday to $20.64 while ETE's advanced almost 6% to $14.41.