The tug-of-war being played out for Southern Union Co. continued on Tuesday with Energy Transfer Equity LP (ETE) topping by 25 cents a $44/share offer by Williams. The $9.4 billion bid is the second time ETE has countered Williams' offers for the Houston-based gas pipeline company.

Southern Union's board unanimously approved the amended offer under which Dallas-based ETE agreed to pay $5.7 billion in cash and common units, as well as assume the debt. ETE said it has received revised support agreements from Southern Union that represent 14% of its total shares outstanding.

ETE's latest offer is $11.25/share higher than it originally had offered for Southern Union in mid-June before a bidding war with Williams began (see Shale Daily, June 17). Williams in early July responded to ETE's takeover attempt with a $39/share bid and was then followed by ETE, which raised its offer to $40/share. Last Thursday Williams countered with a bid of $44/share for a total enterprise value of just under $9.4 billion, which received a positive response from Southern Union (see Shale Daily, July 18).

"Our ability to be creative with our structure has improved the tax efficiency, therefore allowing us to increase our price," said ETE Chairman Kelcy Warren, who is also the largest unitholder. "This is simply a superior transaction with upside potential and the ability to close on an expedited basis. The terms of this revised agreement demonstrate our commitment to executing this transaction."

In connection with the revised merger agreement, ETE amended its agreement for Southern Union's half interest in Citrus Corp., which owns 100% of the Florida Gas Transmission pipeline system. ETE now plans to buy the pipeline stake and transfer it to Energy Transfer Partners LP, its master limited partnership, for $2 billion.

To ensure the transaction can be completed "in or before" the first three months of 2012, ETE also has agreed to divest some businesses, "to the extent required by regulators."

Southern Union Chairman George L. Lindemann said the revised offer "provides our shareholders with superior value, greater certainty to close and unrivaled strategic benefits that could not be achieved through any other industry combination."

The other shoe has yet to drop, however, with Williams apparently willing to offer even more than it did last week, an analyst told NGI's Shale Daily. Williams on Tuesday had no comment.