Thursday, July 21, 2011

Energy Transfer offers $5.7 billion for Southern Union, tops Williams bid by small amount

Energy Transfer Equity LP (ETE) after the close of the market on July 19 agreed to buy Southern Union Co. (SUG) for about $5.7 billion, its second effort to outbid Williams Cos. and complete the biggest purchase of a pipeline operator this year.

The proposal values SUG at about $44.25 a share, redeemable in cash or stock, according to a statement from Dallas-based Energy Transfer and Southern Union. It's a 57 percent premium over Southern Union’s closing price on June 15, the day before the companies first announced the takeover.

"Our ability to be creative with our structure has improved the tax efficiency, therefore allowing us to increase our price," Energy Transfer Chairman Kelcy Warren said in the statement.

Williams and Energy Transfer are vying for Houston-based Southern Union's 15,000 miles of natural-gas pipelines, which can connect new fields in Texas and Oklahoma to markets in the U.S. Midwest and Florida.

Southern Union rose above the Energy Transfer offer price, gaining $1.01, or 2.3 percent, to $44.34 at 4:05 p.m. on July 19 in New York Stock Exchange composite trading. Energy Transfer fell 50 cents, or 1.1 percent, to $43.53. Williams rose 60 cents, or two percent, to $30.64.

The ETE offer just barely trumps the Williams offer, Standard & Poor's said in a statement.

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