The war of words continued on Wednesday between Energy Transfer Equity LP (ETE) and the object of its merger affections, Southern Union Co.

In the second letter in two days, ETE on Wednesday warned its potential takeover target that opening up separate discussions with Williams would be a "willful and intentional breach" of their merger agreement.

In a filing with the Securities and Exchange Commission (SEC), ETE admonished Southern Union after it agreed on Tuesday to negotiate with Williams, which last week proposed to acquire the company for $39/share, or a total of $8.7 billion including debt (see Shale Daily, June 27). Williams' offer trumps ETE's offer of about $33/share, or $7.9 billion (see Shale Daily, June 17).

ETE warned in its letter to Southern Union that Williams' offer was "highly speculative" and likely wouldn't be superior to ETE's original offer, which it said has tax benefits and quarterly yield payments. The information exchange with Williams would not cause ETE to pull its June 16 merger agreement but "we believe the sharing of Southern Union's confidential information with Williams, a competitor in significant markets, could materially damage the business that ETE will be acquiring."

In response, Southern Union said it "has exercised great care, and will continue to exercise great care, to comply fully" with the terms of its agreement with ETE.