Energy Transfer Equity Agrees to Acquire Southern Union for $44.25/share

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Last Update: 19-Jul-11 13:31 ET

Southern Union (SUG $44.23 +0.90) and Energy Transfer Equity (ETE $43.85 -0.18) announce improved agreement that provides SUG shareholders $44.25/share in cash or ETE common units.

The companies entered into an amended and restated merger agreement under which ETE will acquire SUG for $9.4 billion, including $5.7 bln in cash and ETE common units. Under the terms of the revised agreement, which has been unanimously approved by the boards of directors of both companies, SUG shareholders can elect to exchange their common shares for $44.25 of cash or 1.000x ETE common unit. The maximum cash component is 60% of the aggregate consideration and the common unit component can fluctuate between 40% and 50%. Elections in excess of either the cash or common unit limits will be subject to proration.

In connection with the revised merger agreement, ETE has signed an amended drop down agreement to sell SUG's 50% interest in Citrus, which owns 100% of the Florida Gas Transmission pipeline system, to Energy Transfer Partners, L.P. (ETP) for total consideration of $2.0 bln. The obligations of ETE are to be assumed by SUG immediately prior to closing of the ETE/SUG merger.

The proceeds received will be used to fund a portion of the merger consideration and to repay existing SUG-related debt to maintain appropriate investment grade credit metrics. The sale of this interest in Citrus is not subject to any financing condition on the part of ETP or ETP unitholder approval and is not a condition to the consummation of the SUG merger... The merger is not subject to any financing condition and is supported by ~$3.7 billion in committed financing from Credit Suisse.