Monday, June 27, 2011

Williams Fights Energy Transfer Equity For Southern Union

Energy Transfer Equity's (ETE) bid for Southern Union (SUG) should have been a done deal when it was announced.  Some acquisition targets are just too juicy to ignore.  Now Williams (WMB) is jumping into the fray with an all-cash $39/share bid for SUG.  Merger fights make life interesting.  The benefit to SUG investors is the enhanced price discovery from competing bids.  The problem is that the boards of both ETE and SUG have already approved their merger, so now a costly proxy fight among SUG shareholders is likely. 

This action might make for a good merger arbitrage play as long as Williams doesn't withdraw its bid.  I might have more to say in a few days once I have a chance to compare all three companies' financial statements.