Southern Union Takes Dallas-Based Energy Transfer Equity Offer

Article excerpt

Energy Transfer Equity LP on Tuesday again upped its offer for Southern Union Co., this time raising it 25 cents per share over rival Williams Cos. Inc.

Energy Transfer and Southern Union said on Tuesday they have entered into an amended cash-and-stock offer under which Energy Transfer will acquire Southern Union for a total of $9.4 billion, including $5.7 billion in cash, Energy Transfer common units and debt.

Under the terms of the revised agreement, Southern shareholders can exchange their common shares for $44.25 of cash or one ETE common unit. Under the earlier deal, Southern shareholders could have elected to exchange their common shares for $40 of cash or 0.903 ETE common units.

Both companies' boards have approved the deal. Energy Transfer has also secured shareholder commitments representing about 14 percent of Southern Union's outstanding shares.

Tulsa-based Williams and Dallas-based Energy Transfer have been vying for Houston-based Southern Union for more than a month. Energy Transfer offered $33 per share for the company in mid-June. A week later, Williams offered $39 per share. This month, Energy Transfer raised its bid to $40 per share. Last week Williams offered $44 per share.

Williams is evaluating its options, said Jeff Pounds, Williams' spokesman. Southern Union's merger with either company could bring regulatory scrutiny because of the size and similarity of their businesses.

As part of the deal, Energy Transfer said it would sell Southern Union's 50-percent stake in Citrus Corp., which owns the Florida Gas Transmission pipeline system, to its Energy Transfer Partners LP subsidiary.

Energy Transfer just had the better deal to offer Southern Union this time, said Katie Michaels-Johnson, portfolio manager for Tulsa- based Fredric E. Russell Investment Management Co.

"Nothing's final yet," Michaels-Johnson said. "The deal will still have to gain regulatory and shareholder approval, but it is likely to do so."

Greg Womack, president of Edmond-based Womack Investment Advisers Inc., agreed.

"Williams tried, but it looks like it's over," Womack said. "Southern Union feels like they're better served with Energy Transfer. …