Pricey Union

6 July 2011 By Christopher Swann

Investors don’t expect Williams to give up the chase for Southern Union. But to trump Energy Transfer’s latest $5 bln offer it may end up destroying value for shareholders. With only skimpy synergies on offer, Williams may do better to leave the overpaying to its rival.

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Shares in Southern Union, the pipeline operator, were trading more than $2 higher than a bid from Energy Transfer Equity on July 6, suggesting investors expect a better offer. Energy Transfer Equity has been locked in a bidding war for Southern Union with rival Williams Companies.

Energy Transfer made its first bid for Southern Union at $33 a share on June 16. Williams countered on June 23, raising its allcash bid to $39 a share. On July 6 Energy Transfer Equity sweetened its bid to $40 a share in cash and stock.

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