Energy Transfer Equity LP said Thursday that it has agreed to acquire natural gas company Southern Union Co. for about $4.2 billion, creating one of the country's largest natural gas pipeline companies.
The combined company would have more than 44,000 miles of natural gas pipelines and about 30.7 billion cubic feet per day of natural gas transportation capacity.
It's the second major acquisition for Dallas-based Energy Transfer in the past few months. In March, the company's subsidiaries formed a joint venture to acquire LDH Energy Asset Holdings LLC, a Wilton, Conn. energy marketing and transportation company, for about $1.93 billion in cash.
Dallas-based Energy Transfer will pay $33 per share for Southern Union, a 17 percent premium to Southern Union's closing stock price on Wednesday.
Southern Union shares climbed $4.79 to $33.05 in pre-market trading.
Under the agreement, Southern Union will become a subsidiary of Energy Transfer. Energy Transfer will assume $3.7 billion in Houston-based Southern Union's debt, boosting the overall transaction value to $7.9 billion.
The deal has been approved by both companies' boards. It still must be approved by Southern Union shareholders and government regulators. The acquisition is expected to close in the first quarter of 2012.
Credit Suisse Securities was the financial advisor for Energy Transfer and Evercore Partners advised Southern Union.