The fight to buy Southern Union (ETP, SUG, WMB)

The fight for Southern Union Company (NYSE: SUG) is getting more intense.Two rivals, Williams Companies (NYSE: WMB) and Energy Transfer Partners (NYSE: ETP), have been courting SUG for several months, each outbidding the other at least once. The latest raised offer is from ETP, which according to the New York Times:

But the Williams Companies‘ $39-a-share rival bid for Southern Union forced the company to step up. And so on Tuesday, Energy Transfer announced a new $40-a-share bid that includes both cash and equity that is both higher and simpler.

“We’ve been more aggressive here than we have been than probably in my whole career,” Kelcy Warren, Energy Transfer’s chairman, said in a conference call with analysts on Tuesday morning. …

The current offer, Mr. Warren and Energy Transfer’s management argued, gave shareholders a choice. About 14 percent of Southern Union’s shareholders — which likely include the company’s founder and chairman, the billionaire George L. Lindemann — have agreed to take the equity.

Why all the interest in SUG?

The battle over Southern Union has put a spotlight on Energy Transfer, a major operator of natural gas pipelines that struck the deal to take advantage of a growing demand for oil alternatives. …

Putting Energy Transfer and Southern Union together would create a big pipeline operator with more than 44,000 miles of pipelines and about 30.7 billion cubic feet of natural gas capacity.

Additionally, according to Bloomberg,

Williams and Energy Transfer covet Southern Union’s 15,000 miles of natural-gas pipelines, particularly in Florida, as the disaster at Japan’s Fukushima plant curtails demand for nuclear power and coal producers face environmental regulations, according to WallachBeth Capital LLC.

Energy Transfer, which owns the largest intrastate system in Texas, has assets close to Southern Union’s natural gas conduit that runs from the biggest gas-producing state and spans Florida. Adding its lines will almost double Energy Transfer’s network. Williams’s Gulfstream pipeline, a partnership with Houston-based Spectra Energy Corp. (SE), already supplies natural gas to parts of Florida.

Covestor models that hold ETP as of 7/5 include:

Covestor models that hold WMB as of 7/5 include:

  • Large Cap by Gator Capital

No Covestor models hold SUG as of 7/5.


“Energy Transfer Says It Is ‘More Aggressive’ in Pursuit of Southern Union” New York Times, 7/5.

“Southern Union Seen Surging Most of U.S. Takeovers as Bids Boil: Real M&A” Bloomberg, 7/6.