It’s better to be lucky than good, and luckier still if your errors and those of your lawyers end up invalidating a regretted merger bid.

Our top-ranked Best Buy Energy Transfer Equity (NYSE: ETE) got that lucky in Delaware Chancery Court Friday when a judge ruled it can back out of acquiring Williams (NYSE: WMB) without penalty.

The ruling likely lifts the threat of a distribution cut contemplated in connection with the merger, leaving Energy Transfer Equity to focus on driving growth at affiliated MLPs and financing construction of its liquefied natural gas export terminal. ETE units remain cheap for a diversified midstream general partner of its stature, and with the risk of a costly and destabilizing acquisition just about gone we’re raising the Buy limit to $19 on what remains our favorite recommendation.

Williams is now at a greater risk of its own dividend cut, identified by management as the preferred means of curbing high debt leverage. Its share price was down 1% early Monday. The company’s pipelines are strategically positioned to deliver growth and the valuation is appealing despite the likelihood of a lower payout in the near term. But we’re downgrading WMB to hold until the dust settles.

Judge Sam Glasscock III rejected Williams’ request to force Energy Transfer to complete the acquisition, and found little support for the company’s claims that its onetime suitor has obstructed the deal in violation of the merger agreement.

Glasscock focused instead on the narrow question of whether Energy Transfer’s lawyers, charged by the merger agreement with issuing a key opinion affirming the tax-free nature of the deal, acted in good faith in ultimately refusing to do so.

The lawyers’ confidence in favorable tax treatment of the complicated merger evaporated at the 11th hour after Energy Transfer’s executive vice president in charge of tax matters luckily realized that he’d previously gotten a key detail of the transaction wrong, and started worrying that the error might cost his company an estimated $1 billion in additional taxes.

Luckily for him and Energy Transfer, Energy Transfer’s lawyers at Latham and Watkins agreed, and luckily for everyone except Williams, the judge concluded that they did so after a thorough and fair-minded Investigation.

Latham’s desire to help its client scuttle the no longer desirable merger was just as likely offset by the concern for its legal reputation, which, Glasscock wrote, suffered “at the least a blow” now that the firm has been forced to backtrack on its initial analysis. The judge was particularly impressed by testimony of one Latham partner who said there was “not a chance” he would ever contradict his professional judgement to aid a client.

Williams lacked hard evidence that Latham hasn’t, in fact, acted in good faith. Its case rested largely on a series of procedural delays by Energy Transfer or its lawyers that Williams claimed added up to a pattern of obstruction.

The judge rejected that view, while deferring judgement on a preferential insider dividend reinvestment scheme that Williams had contested, and which remains the focus of a separate unitholder lawsuit.

At this point the merger looks all but dead and a last-minute compromise highly unlikely given the rancor of the past six months. That should be confirmed this week if Energy Transfer officially pulls out of the deal, as it’s entitled to do as of June 29 under Glasscock’s ruling.

Williams, meanwhile, is still encouraging shareholders to approve the merger on June 27 in order to preserve its appeal hopes. More plausibly, it might revisit its prior plan to absorb Williams Partners (NYSE: WPZ) in order to save on distributions.