DOW JONES NEWSWIRES
Williams Cos. (WMB) reiterated its offer of $44 a share to take over rival pipeline company Southern Union Co. (SUG), saying recent market volatility underscores the benefits of its all-cash bid.
Southern Union last month agreed to a cash-and-stock buyout from Energy Transfer Equity LP (ETE). Valued at $5.7 billion at the time, it trumped Williams's $5.6 billion offer.
But Energy Transfer's latest offer included a common unit component. Southern Union holders can elect to receive $44.25 in cash or one Energy Transfer common unit. The price of the units was $39.42 as of Tuesday's close, and the cash component of the agreement is limited at 60% of the aggregate consideration of the deal. The common unit component can fluctuate between 40% and 50%.
Tuesday, Williams said its offer represents value certainty and a premium of 4% over the implied valued of the Energy Transfer offer, assuming Southern Union shareholders elect the maximum cash percentage under that agreement.
"Southern Union's current agreement with Energy Transfer includes illiquid partnership units whose value will be exposed to equity markets in the months until closing and beyond," Williams Chief Executive Alan Armstrong said in a release, adding that his company was "ready and excited" to quickly sign a merger agreement with Southern Union.
The winner in the bidding war would grow to be the largest natural gas pipeline company in the U.S.
Southern Union shares were up 1.9% at $42.40 in after-hours trading, while Williams's shares were up 0.2% at $28.21. Energy Transfer's shares weren't active after hours.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; email@example.com