Williams raises bid for US pipeline operator Southern Union to $5.5 billion

The Williams Companies Inc, a US-based gas exploration and production company, yesterday raised its offer to buy pipeline operator Southern Union by nearly 13 per cent to $5.5 billion, topping a sweetened rival bid from Energy Transfer Equity.

Tulsa, Oklahoma-based Williams is now offering 44 per share in cash, for a total enterprise value of $9.4 billion, a premium of 10 per cent over Energy Transfer's sweetened bid

The offer also represents a premium of 56 per cent over Southern Union's closing share price of $28.26 on 15 June 2011, the last trading day prior to the initial Energy Transfer offer.

The raised bid puts Energy Transfer in a fix, which has already struck a deal earlier this year to buy Southern Union in a complicated $33-per-share proposal. Under this offer, Southern Union CEO and COO were to get a combined $100 million payout over five years in consulting and non-competing agreements. (See: Energy Transfer battles Williams' $4.9 bn rival bid for Southern Union)

Williams made a rival $39 per share offer, which was topped by Energy Transfer with $40 per share in cash and stock. Energy Transfer's new offer did away with the payout agreements for Southern Union CEO and COO.

Although the deal may regulatory hurdles, Williams said that it will ''commit to take all necessary actions to obtain federal anti-trust clearance and will otherwise provide the same degree of regulatory certainty as the proposed Energy Transfer transaction.''