Williams, which saw its bid to merge with Southern Union Co. over a competing offer by Energy Transfer Equity LP (ETE) rebuffed again and again this past summer, apparently expressed an interest in acquiring some of Southern Union's assets over the past two months, according to a regulatory filing.

A filing by ETE to the Securities and Exchange Commission (SEC) on Tuesday indicated that Williams CEO Alan Armstrong expressed an interest in acquiring Southern Union's interests in Citrus Corp., Trunkline LNG and Sea Robin Pipeline, among others. Southern Union owns a half interest in Citrus, which owns 100% of the Florida Gas Transmission pipeline system. ETE plans to buy the pipeline stake and transfer it to Energy Transfer Partners LP, its master limited partnership, for $2 billion.

"Southern Union made clear to Williams and ETE that it would consent to an agreement between Williams and ETE only if it resulted in enhanced value for the shareholders of Southern Union," the SEC filing states.

Williams received a "narrowly tailored" waiver of confidentiality rules in early September to discuss potential acquisitions with ETE and Southern Union. "After engaging in these discussions, ETE and Williams were unable to reach an agreement regarding terms of the potential acquisitions," ETE stated. The waiver was terminated on Monday.

Williams had no comment on the report. In its last publicized offer for Southern Union, the Tulsa-based company had argued that its all-cash, $5.6 billion bid, or around $44/share, was superior to ETE's cash-and-stock deal that amounted to $5.7 billion, or $44.25/share (see Daily GPI, July 20). In early August Armstrong said the company was continuing to "evaluate all options" to secure the Southern Union merger but he declined to elaborate (see Daily GPI, Aug. 10).

Houston-based Southern Union owns and operates 20,000 miles of natural gas pipelines along with natural gas utility services in two states, and employs 2,400 people. A merger with ETE -- or Williams -- would create the largest natural gas pipeline franchise in the United States.

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