The Southwest-Oneok merger may be cancelled, but spurned suitorSouthern Union is still proceeding with plans to sue Southwest andothers, the company said yesterday.

“In light of the ongoing investigations, we were not surprisedby Oneok’s announcement [last week] that it is no longer pursuing amerger with Southwest Gas,” said Eric Herschmann, Southern Union’strial counsel. “Our position remains unchanged — we have nointention of acquiring Southwest Gas, and we will vigorouslycontinue to pursue our legal remedies against Southwest Gas andothers. We are confident that the disclosure of additional factswill further strengthen Southern Union’s claims.” The lawsuit callsfor $750 million in damages.

Southern’s actions involving the Oneok-Southwest merger, causedby Southwest’s choice of Oneok over a higher Southern Union bid,led directly to that deal’s decline. Oneok dropped out because”there is simply too much financial risk associated with SouthwestGas right now and we have a responsibility to protect ourshareholders from excessive risk,” said ONEOK CEO Larry Brummett.

Southern Union gained permission in May to join an existinglawsuit against Southwest Gas in a last-ditch attempt to overtakeOneok. The lawsuit originally accused Southwest Gas’ board ofdirectors of refusing to negotiate with Southern Union in goodfaith.

The lawsuit turned ugly soon thereafter. At one point Oneok evenfiled to hold Southern Union in contempt. However, both Oneok andSouthwest Gas were unable to stem Southern Union’s allegations,which grew from accusing Southwest Gas to involving ArizonaCorporation Commission Chairman Jim Irvin. This, in turn, prompteda criminal investigation by the FBI, the U.S. Attorney’s Office andthe Maricopa County (AZ) Attorney’s Office. These investigationsare still ongoing.

Southwest accepted Oneok’s initial merger offer in November1998. The boards of both companies signed the deal after Oneoksweetened the offer from $866 million to $912 million. SouthernUnion had offered a hostile bid in February of $32/share, or $973million, and then increased its bid to $33.50/share, or over $1billion.

The combined company would have had 2.6 million customers infive states. The merger would have created the largest stand-alonegas distribution network in the U.S.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.