ETE Completes Southern Union Merger

Transaction Type
Announce Date
Post Date
Close Date
Estimated Price
$7,900.0MM
Description

Bought midstream company operating in TX, NM,FL, MO, MA & other U.S. areas, gaining 5,500 miles of pipeline, 4 cryogenic processing plants & 5 gas-treating plants.

Energy Transfer Equity LP, Dallas, (NYSE: ETE) has closed its purchase of Southern Union Co., Houston, (NYSE: SUG) for $7.9 billion, including approximately $3.7 billion of existing debt.

Energy Transfer will issue series B units valued at $33 each per Southern Union share for a total of approximately $4.2 billion. This represents an approximate 17% premium to the closing price of Southern Union on June 15.

Southern Union engages in gathering, processing, transportation, storage and distribution of gas in the U.S. The gathering and processing segment of the company operates a network of approximately 5,500 miles of natural gas and NGL pipelines in Texas and New Mexico, which includes four cryogenic processing plants with a combined capacity of 415 million cubic feet per day and five natural gas treating plants with a combined capacity of 585 million cubic feet per day.

The transportation and storage segment provides interstate transportation and storage in the Midwest and from the Gulf Coast to Florida. It also provides LNG terminalling and regasification services.

The distribution segment operates in Missouri and Massachusetts.

Energy Transfer now has direct ownership of attractive assets that are complementary to those owned and operated by ETE’s two MLP subsidiaries, Energy Transfer Partners LP and Regency Energy Partners LP. The combined portfolio of Energy Transfer and Souther Union will include more than 44,000 miles of natural gas pipelines and approximately 30.7 billion cubic feet per day of gas transportation capacity.

Energy Transfer chairman Kelcy Warren says, “The acquisition of Southern Union will give ETE a larger, more competitive interstate and midstream platform and will add significant demand-driven pipeline assets to the Energy Transfer portfolio. Furthermore, the acquisition of Southern Union will significantly enhance and diversify ETE’s cash-flow profile, making this transaction accretive to ETE’s unit holders while preserving our commitment to maintaining investment grade credit metrics at ETP and SUG, and achieving investment grade status at Regency.”

Southern Union chairman and chief executive George L. Lindemann says, “We are thrilled with the opportunities the transaction with Energy Transfer creates. Under our management, we have grown Southern Union from a value of approximately $125 million to approximately $8 billion.”

Eric D. Herschmann, vice chairman, president and COO of SUG, adds, “Southern Union stockholders will receive an attractive premium, an enhanced income stream, and the benefits of owning a company with a larger asset base. We are excited about merging these two highly successful operations and are confident in the potential of the combined entity.”