Energy Transfer Equity To Acquire Southern Union Company

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The recently announced acquisition of the Southern Union Company (SUG) by Energy Transfer Equity, L.P. (ETE), when finalized, will make ETE among the largest natural gas infrastructure players in the U.S.
  Under terms of the deal ETE will acquire Southern Union for $7.9 billion, including approximately $3.7 billion of existing SUG debt, creating what those close to the deal describe as the premier group of integrated midstream companies in the United States natural gas industry.
  Under terms of the agreement, which has been unanimously approved by the Boards of Directors of both companies, stockholders of SUG will exchange their common shares for newly issued Series B Units of ETE with a value of $33.00 per share, or approximately $4.2 billion. The implied value of the Series B Units represents an approximate 17% premium to the closing price of SUG common stock on June 15, 2011. The Series B Units, which will be registered and are expected to be listed for trading on the NYSE, will be entitled to an annualized distribution yield of not less than 8.25%, payable quarterly, based on the implied value of $33.00 per Series B Unit.
  ETE’s acquisition of Houston-based SUG, one of the nation’s leading diversified natural gas companies, will provide ETE with direct ownership of attractive assets that are complementary to the assets owned and operated by ETE’s two master limited partnership subsidiaries, Energy Transfer Partners, L.P. (ETP) and Regency Energy Partners LP (RGNC). The combined footprint of ETE (together with ETP and RGNC) and SUG will include more than 44,000 miles of natural gas pipelines and approximately 30.7 Bcf/d of natural gas transportation capacity. ETE’s acquisition of SUG is expected to result in a more diversified partnership better able to serve its existing customers and compete for new ones.
  The transaction is expected to close in the first quarter of 2012, subject to SUG stockholder approval and regulatory approvals. No ETE unit holder approval is reportedly required for the closing of this transaction.