DOW JONES NEWSWIRES
Williams Cos. (WMB) reiterated its offer of $44 a share to take
over rival pipeline company Southern Union Co. (SUG), saying recent
market volatility underscores the benefits of its all-cash bid.
Southern Union last month agreed to a cash-and-stock buyout from
Energy Transfer Equity LP (ETE). Valued at $5.7 billion at the
time, it trumped Williams's $5.6 billion offer.
But Energy Transfer's latest offer included a common unit
component. Southern Union holders can elect to receive $44.25 in
cash or one Energy Transfer common unit. The price of the units was
$39.42 as of Tuesday's close, and the cash component of the
agreement is limited at 60% of the aggregate consideration of the
deal. The common unit component can fluctuate between 40% and
50%.
Tuesday, Williams said its offer represents value certainty and
a premium of 4% over the implied valued of the Energy Transfer
offer, assuming Southern Union shareholders elect the maximum cash
percentage under that agreement.
"Southern Union's current agreement with Energy Transfer
includes illiquid partnership units whose value will be exposed to
equity markets in the months until closing and beyond," Williams
Chief Executive Alan Armstrong said in a release, adding that his
company was "ready and excited" to quickly sign a merger agreement
with Southern Union.
The winner in the bidding war would grow to be the largest
natural gas pipeline company in the U.S.
Southern Union shares were up 1.9% at $42.40 in after-hours
trading, while Williams's shares were up 0.2% at $28.21. Energy
Transfer's shares weren't active after hours.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com