Williams hasn't given up on a plan to steal Southern Union Co. from Energy Transfer Equity LP (ETE) and late Tuesday offered to buy the company for $44/share in cash -- the same amount on paper that it offered in July.
Although the $44/share matches Williams' last offer in July (see Shale Daily, July 18), the company said its latest bid is 4% more than the implied value of an agreement with ETE of $42.32/share based on the closing price of ETE units on Tuesday "assuming Southern Union shareholders elect the maximum cash percentage under that agreement," which was accepted last month (see Shale Daily, July 20). ETE's most recent offer of $44.25/share was based on stock market prices at the time.
Williams CEO Alan Armstrong said during a conference call earlier this month that the company continued to "evaluate all options" in its attempt to merge with Southern Union (see Shale Daily, Aug. 10). Williams has dogged ETE with counterbids for Southern Union since the friendly takeover bid was launched two months ago (see Shale Daily, June 17).
Armstrong conveyed the latest proposal in a letter to the special committee of Southern Union's board of directors. Williams' offer represents "a material premium to the implied value of the Energy Transfer deal based on any recent average trading price of Energy Transfer units, including one-week, one-month, three-month, six-month and one-year averages," he said.
Acquiring Southern Union would be an "excellent strategic fit," said the CEO. "$44 a share, cash, for every shareholder is a superior offer for Southern Union's shareholders. 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' due diligence is complete, we have reviewed Southern Union's recent [Securities and Exchange Commission Form] 10-Q and we have evaluated the market conditions and environment. We are ready and excited to move forward quickly to sign a definitive merger agreement and combine Southern Union with Williams."
The Williams proposal is not subject to any financing conditions and the company said it had delivered investment commitments to finance the all-cash purchase price to be signed concurrent with signing the merger agreement. It said it also "remains committed to take all necessary actions to obtain federal antitrust clearance and will provide the same degree of regulatory certainty as contained in the second amended Energy Transfer agreement."
Barclays Capital and Citigroup are serving as financial advisers to Williams, and Cravath, Swaine & Moore LLP and Gibson, Dunn & Crutcher LLP are serving as its legal advisers.