Energy Transfer Rejects Williams Request For Southern Assets
October 12 2011 - 6:58PM
Dow Jones News
Williams Cos.' (WMB) months-long pursuit of fellow pipeline
operator Southern Union Co. (SUG) ended with a failed bid for
Southern's crumbs, according to a securities filing by successful
bidder Energy Transfer Equity LP (ETE).
Energy Transfer said in the Tuesday filing that it and Southern
ended discussions with Williams about selling some of Southern's
assets after the merger, a $5.7 billion deal that would create the
nation's largest pipeline company. A vote by Southern shareholders
to approve the sale has yet to be scheduled.
Williams asked for those talks on Sept. 2, after losing a summer
bidding war to Energy Transfer, the filing shows.
Southern's executives had been pondering strategic alternatives
and entertaining offers for the company since 2008, but it was
Energy Transfer's $4.2 billion offer in June that touched off the
back-and-forth. In the end, the bidding added $1.5 billion to
Southern's price tag.
Energy Transfer has agreed to pay $5.7 billion in a
cash-and-stock deal. Meanwhile, Williams Cos' standing, unsolicited
offer would pay Southern shareholders $44 per share in an all-cash
deal valued at $5.6 billion.
Williams and Energy Transfer operate large interstate pipelines
that transport natural gas from major energy fields. Southern is
attractive to both companies because its lines offer inroads to big
gas-consumption markets in Florida and the Midwest.
According to Tuesday's filing, Williams had expressed interest
in buying several Southern assets if it couldn't have the whole
company.
Among the assets Williams said it may want were lines that carry
gas from north Texas and the Gulf Coast to Michigan and another
that brings gas ashore from deep in the Gulf of Mexico.
But a month's worth of talks were fruitless, Energy Transfer
said in the filing.
"After engaging in these discussions, (Energy Transfer) and
Williams were unable to reach an agreement," Energy Transfer said
in its filing.
Through representatives, Williams and Southern both declined to
comment. An Energy Transfer spokeswoman wasn't immediately
available for comment.
Selling Southern assets to Williams would make little financial
sense, said Morningstar analyst Avi Feinberg. Although Energy
Transfer may have to unload a few assets for the deal to meet
regulatory approval, it would better suit the company to sell them
to Energy Transfer Partners and Regency Energy Partners, two master
limited partnerships associated with Energy Transfer Equity.
"If Energy Transfer sold them to Williams, it'd almost be
counterproductive," Feinberg said.
Southern shares closed up Wednesday at 0.1% at $40.68.
-By Ben Lefebvre and Ryan Dezember, Dow Jones Newswires;
713-547-9201; ben.lefebvre@dowjones.com;
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