Energy Transfer Equity LP (ETE) agreed to takeover Southern
Union Co. (SUG) in a $8.9 billion deal, topping an offer from rival
suitor Williams Cos. (WMB), and substantially higher than Energy
Transfer's initial offer.
Under the revised terms of the deal, Southern Union shareholders
will receive $40 in cash or 0.903 Energy Transfer common units for
each share. A maximum of 60% can be taken in cash, while the common
unit component can fluctuate between 40% and 50%.
"We are pleased to be able to deliver superior value to our
shareholders, with greater certainty to close, through this
transaction with ETE," said Southern Union Chairman and Chief
Executive George L. Lindemann. "This deal creates strategic
benefits that could not be achieved through any other industry
combination. Our businesses are highly complementary and the
combination will provide a broader range of services and market
access that our existing and future customers demand."
The revised deal, which will create the largest natural gas
pipeline operator in the U.S., comes after Energy Transfer Partners
last week had admonished Southern for its decision to negotiate
with rival suitor Williams Cos., which made a $5 billion cash, or
$39 a share, counterbid for Southern Union on June 23.
Energy Transfer last month had announced a deal to purchase
Southern for about $4.2 billion. Under the terms of that bid,
Southern Union shareholders would receive Energy Transfer units
valued at $33 per share, which, under certain circumstances, could
be converted into cash.
The two companies hope that combining Energy Transfer's position
in prolific natural-gas production areas with Southern's access to
markets will make them better able to transport natural gas through
what is becoming an increasingly congested system.
Energy Transfer common units, Southern Union shares and Williams
shares closed Friday at $44.68, $40.37, and 30.77, respectively.
None were active premarket.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com