Energy Transfer raises Southern Union bid to $9.4bn

Energy Transfer Equity, the US pipeline owner, has again upped its offer for Southern Union, the natural gas company, countering rival Williams’ improved $9.4bn bid to upset ETE’s agreed deal.

ETE said on Tuesday that it had now agreed to acquire Houston-based Southern Union for $9.4bn including debt, of which $5.7bn would be paid in cash.

The revised agreement comes a few days after Williams again sought to bust up the deal, increasing its first all-cash offer by about 13 per cent and proposing to pay $44 a share for Southern Union.

ETE’s latest offer represents a price of $44.25 a share, with shareholders able to elect whether they receive cash or stock, the company said. The price now is a third above the level of ETE and Southern’s original agreement, announced back in June.

Southern Union shares jumped about 2.2 per cent to $44.29 a share on Tuesday, giving the company a market value of $5.52bn.

ETE stock slipped 0.6 per cent to $43.75. Williams shares were trading up 1.2 per cent at $30.42.

Shareholders holding 14 per cent of Southern Union stock have agreed to back ETE’s offer, the companies said, primarily reflecting the holdings of George Lindemann, Southern Union’s chairman and chief executive, and Eric Herschmann, president and chief operating officer.

“This revised merger agreement provides our shareholders with superior value, greater certainty to close and unrivalled strategic benefits that could not be achieved through any other industry combination,” Mr Lindemann said.

ETE is battling with Williams over who will buy Southern Union at a time when energy companies are seeking to secure the infrastructure that links new US supplies of natural gas with end-users.

Southern Union operates more than 15,000 miles of interstate pipelines, which transport natural gas from points of production to major markets in the southeast, midwest and Great Lakes regions. Its gas services business has about 5,500 miles of pipelines that handle and treat natural gas in Texas and New Mexico.

ETE kicked off the bid battle in June, agreeing to a $33 a share stock merger with Southern. Williams made its first counterbid later that month.

Southern Union has engaged in discussions with Williams and provided the company with information to help proceed with its bid.

Both potential buyers have said they will take all necessary steps to gain antitrust approval from regulators for their respective deals.

Evercore Partners and Goldman Sachs are advising the special committee of Southern Union’s board of directors. Credit Suisse is advising ETE on its bid. Barclays Capital and Citi are advising Williams.