The trouble with being famous as the industry’s shrewdest deal maker is that, one, success requires ever bigger deals and, two, the guys across the table must be paranoid about getting taken to the cleaners.

That’s the predicament Energy Transfer Equity (NYSE: ETE) chief Kelcy Warren finds himself in now that his merger advances have been spurned by a second big competitor in the last year.

Last summer, Warren couldn’t lure Targa Resources (NYSE: TRGP) to the altar despite a rich bid. Now it’s Williams (NYSE: WMB) effectively calling him a cheapskate.

Late on the Sunday evening of June 21, Williams acknowledged an all-equity bid by an unidentified suitor valuing it at $64 per share, a 32% premium to the prior closing price. It said its board  had determined that the offer “significantly undervalues” the company. The board nevertheless authorized “a process to explore a range of strategic alternatives” including a merger, implying that it might be receptive to a significantly improved offer.

In the meantime, Williams plans to continue with its planned buyout of the affiliated Williams Partners (NYSE: WPZ) MLP, even though the offer it had just rejected was conditioned on the cancellation of that deal.

Energy Transfer responded hours later by identifying itself as the suitor and laying out the details of, and the rationale for, its proposed deal. It noted that it has attempted to engage senior management of Williams for nearly six months, stepping up its efforts after the latter proposed merging with Williams Partners.

Source: Energy Transfer presentation

After that deal was announced last month, Energy Transfer sent a written offer to the Williams CEO. It followed up with a letter to the chairman of the Williams board of directors on June 11 and to the entire board on June 18, which finally prompted the latter to reveal the overture and “explore strategic alternatives.”

This planned exploration is an important contrast to Targa’s clipped rejection of a similar overture by Energy Transfer last year; it signals a willingness to consider other (and presumably better) offers, whether from Energy Transfer or others.

The deal’s prospects might be helped by the presence of two hedge fund nominees on the Williams board, though the funds in question control less than 9% of the outstanding shares. Still, that’s a lot more than the 0.1% held by management.

“We are confident in our strategic plan and the significant value that will be created through the acquisition of WPZ and our large portfolio of growth projects. At the same time, we are open minded and committed to ensuring that Williams is maximizing value for shareholders,” said Williams CEO Alan Armstrong.

That will be a tall order without a deal, in light of the stock’s 26% leap on news of Energy Transfer’s bid Monday (at which point we recommended selling half of your initial position) and subsequent back-sliding. Energy Transfer Equity units lost some ground initially but have hung in there pretty well given Warren’s willingness to issue $48 billion in new equity in order to snag Williams.

This would take the form of new shares in a taxable subsidiary of ETE, which would allow for a tax-free exchange of WMB shares for Williams shareholders. Those shares would have the same economic interest as ETE units, which would continue to distribute partnership income while the taxable offshoot paid qualified dividends. According to Energy Transfer, the new shares would improve on WMB’s current dividend and provide dividend growth “far superior” to Williams’ pledge to increase the payouts by 10-15% annually through 2020.

Energy Transfer Equity’s most recent distribution represented a 37% increase from a year earlier.

Acquiring Williams would dramatically expand the Energy Transfer corporate family’s presence in the Northeast, where Williams has been befitting from booming natural gas output in the Marcellus shale.