2ND UPDATE: Southern Union Reaffirms Deal With Energy Transfer

Southern Union Co. (SUG) officially spurned William Cos.'s (WMB) reiterated all-cash $5.6 billion takeover bid Wednesday, affirming its approval to merge with rival pipeline company Energy Transfer Equity LP (ETE).

Southern's announcement came a day after Williams argued that its $44-a-share offer would prove to be worth more than Energy Transfer's bid of stock-and-cash, the value of which was pegged at $5.7 billion when Southern first approved it on July 19 but has been hurt by the recent volatility in the stock market. Southern's ultimate decision on a merger partner would lead the winner to become the country's largest natural-gas pipeline company.

"We have unanimously determined that your $44 cash proposal neither constitutes nor is reasonably likely to result in a superior offer," Southern said in a filing with the U.S. Securities and Exchange Commission.

A Williams spokesman said the company was evaluating its options. Southern and Energy Transfer are expected to close the deal in the first quarter of 2012, pending shareholder approval.

Energy Transfer and Williams hoped to add their position in prolific natural-gas production areas with Southern's access to markets, a combination that would make them better equipped to move natural gas through a system that has become increasingly congested as new drilling technology leads to a gas glut.

Energy Transfer's initial mid-June offer of $4.2 billion for Southern sparked a bidding war with Williams that eventually added $1.5 billion to Southern's price tag.

-By Ben Lefebvre, Dow Jones Newswires; 713-547-9201; ben.lefebvre@dowjones.com

Southern Union (NYSE:SUG)
Historical Stock Chart
From Oct 2024 to Nov 2024