ETE buys Southern Union for $7.9bn

Energy Transfer Equity, a publicly traded partnership that operates gas pipelines in southern and central US, will pay $7.9bn including debt to acquire Texas-based Southern Union,  reports the FT. The all-stock deal is one of the largest in the US energy sector this year and will create the biggest US pipeline group by capacity. It comes less than three months after ETE agreed to buy LDH Energy, another Texas-based pipeline and processing company, for $1.93bn. After the Southern deal, the group including affiliated companies will be valued at about $40bn. ETE and Southern have identified $100m per year in commercial and operational synergies. ETE also hopes to use Southern’s more stable cash flows to help finance new pipelines and processing plants. Gas glut or not, says Lex, the strong cash flows to pipeline unitholders are increasingly attractive to investors in a low-yield world, creating plenty of basis for optimism”.