Energy Transfer Equity, L.P. (NYSE:ETE) and Southern Union Company (NYSE:SUG) today announced that they have entered into an amended and restated merger agreement under which ETE will acquire SUG for $9.4 billion, including $5.7 billion 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.
“Our ability to be creative with our structure has improved the tax efficiency, therefore allowing us to increase our price,” said Kelcy Warren, ETE’s Chairman of the Board of Directors and largest unitholder. “This is simply a superior transaction with upside potential and the ability to close on an expedited basis. The terms of this revised agreement demonstrate our commitment to executing this transaction.”
ETE has received revised support agreements in connection with the revised merger agreement from shareholders representing 14% of SUG’s total shares outstanding, who have agreed to pre-elect to receive ETE common units as their consideration, subject to the same proration as all other shareholders.George L. Lindemann, Chairman and CEO of SUG, said, “This revised merger agreement provides our shareholders with superior value, greater certainty to close, and unrivalled strategic benefits that could not be achieved through any other industry combination.” Eric D. Herschmann, Vice Chairman, President and COO of SUG, added, “We have negotiated the most compelling transaction for Southern Union shareholders, both in terms of immediate cash value and potential upside of the combined companies through long-term equity ownership in ETE.”