Natural gas pipeline company Southern Union Co. on Tuesday agreed to be bought by Energy Transfer Equity for $5.7 billion, topping a bid from rival Williams Cos.
The cash-and-stock offer works out to $44.25 per share. The deal is worth a total of $9.4 billion, including debt.
Energy Transfer Equity LP and Williams Cos. have been battling for Southern Union, based in Houston, for over a month. Energy Transfer, which is based in Dallas, offered $33 per share for the company in mid-June. A week later, Williams offered $39 per share. Earlier this month, Energy Transfer raised its bid to $40 a share. Last week Williams offered $44 per share.
Southern Union's tie-up with either company could bring close regulatory scrutiny because of the size and similarity of their businesses. Energy Transfer says it will sell some businesses to satisfy regulators.
Both companies' boards have approved the deal. Energy Transfer has also secured shareholder commitments representing about 14 percent of Southern Union's outstanding shares.
"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," Southern Union Chairman and CEO George L. Lindemann said in a statement.
Energy Transfer believes it can complete the merger within the first three months of next year.
In connection with the deal, Energy Transfer agreed to sell Southern Union's 50 percent stake in Citrus Corp., which owns the Florida Gas Transmission pipeline system, to its Energy Transfer Partners LP subsidiary.
The deal has about $3.7 billion in financing from Credit Suisse.
Southern Union transports and stores natural gas in the Midwest and from the Gulf Coast to Florida through a network of over 15,000 miles of pipelines. It also distributes natural gas to residential, commercial and industrial customers in Missouri and Massachusetts.
Southern Union shares rose 95 cents, or 2.2 percent, to $44.28 in afternoon trading. Energy Transfer Equity shares lost 7 cents at $43.96.