Bloomberg News

Southern Union Holders Approve Energy Transfer Takeover Bid

December 12, 2011

(Updates with closing share prices in penultimate paragraph.)

Dec. 9 (Bloomberg) -- Southern Union Co. shareholders approved a $5.3 billion takeover by Energy Transfer Equity LP, ending a bidding contest for the Houston-based pipeline company.

About 98 percent of voting shareholders approved the deal, Southern Union said in a statement today. Holders have the option to receive either $44.25 in cash or one Energy Transfer partnership unit, with a maximum of 60 percent of shares paid in cash, according to terms of the agreement.

Energy Transfer, based in Dallas, made its first bid for Southern Union in June and raised its price twice to fend off counteroffers from Williams Cos. Energy Transfer may discuss selling some of Southern Union’s 15,000 miles (24,000 kilometers) of natural-gas lines to Tulsa, Oklahoma-based Williams, Chief Executive Officer Kelcy Warren said.

“There are assets that may be more valuable to Williams than they are to us,” he said in phone interview today.

Energy Transfer likely will keep Southern Union’s Texas pipelines and its 50 percent interest in Citrus Corp., owner of the Florida Gas Transmission system, Warren said. The company’s Panhandle Eastern and Trunkline systems, which connect Texas to the U.S. Midwest, are “not in the same tier as Citrus and the West Texas assets,” Warren said.

Energy Transfer predicts $100 million in savings in two to three years by combining the companies. That may include job cuts, Warren said.

Missouri Approval

The purchase, which the companies expect to close in the first quarter of next year, still requires approval from the Missouri Public Service Commission, where Southern Union owns a gas utility. Agency staff said on Dec. 6 they will make a recommendation on the deal by Jan. 6.

Southern Union rose 0.9 percent to $42 at the close in New York. Energy Transfer gained 2.1 percent to $38.59 and Williams climbed 1.7 percent to $31.65.

The takeover was the biggest announced pipeline purchase of the year until October, when Kinder Morgan Inc. agreed to buy El Paso Corp. for $21 billion, according to Bloomberg data.

--Editors: Tina Davis, Jessica Resnick-Ault

To contact the reporter on this story: Mike Lee in Dallas at mlee326@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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