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Energy Transfer Strikes Back

Written By Brianna Panzica

Posted July 19, 2011

Just when we thought the bidding for Southern Union (NYSE: SUG) might end, Energy Transfer Equity (NYSE: ETE) has come back with another offer.

Last week, Williams Cos (NYSE: WMB) outbid Energy Transfer with an offer of $44 per share, significantly higher than Energy Transfer’s last bid of $40 per share.

But Energy Transfer has not given up. Today they placed a bid for $44.25 per share, a total of $5.7 billion.

Including debt assumption, this acquisition would actually total $9.4 billion.

According to the terms of Energy Transfer’s offer, Southern Union could choose between $44.25 in cash per share or one common unit of ETE per Southern Union share.

The maximum cash component is 60%, while the common unit component is expected at 40% to 50%, according to Wall Street Journal’s “Market Watch”.

Williams Cos’ last bid of $5.6 billion was under review by Southern Union’s Board of Directors when Energy Transfer increased their bid.

Energy Transfer’s chairman Kelcy Warren gave a statement on this bid, saying, “Our ability to be creative with our structure has improved the tax efficiency, therefore allowing us to increase our price.”

The acquisition of Southern Union would allow Energy Transfer to double their pipeline capacity.

They would receive over 15,000 miles of pipeline connecting oil and gas fields in Texas and Oklahoma to refineries in Florida.

These assets would be extremely valuable to both companies.

Energy Transfer has also signed an agreement that would allow them to sell Southern Union’s 50% in Citrus Corp to Energy Transfer Partners (NYSE: ETP), reported “Market Watch”.

Citrus Corp owns the Florida Gas Transmission pipeline system.

Shares of Southern Union rose over 2% this afternoon, while shares of Energy Transfer Equity were down 1.2%.

That’s all for now,


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