Southern Union Opens Talks With Williams

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Natural gas pipeline operator Southern Union has agreed to hold takeover talks with Williams Cos., the natural gas provider that recently launched a $4.86 billion takeover bid for Southern Union, topping the $4.2 billion previously offered by Texas-based master limited partnership Energy Transfer Equity.

Energy Transfer (ETE) has moved to block the talks between Southern Union and Williams, claiming Southern Union is barred from holding such discussions under an agreement shared between itself and its target.

Southern Union's (SUG) board said ''the failure to take such actions would be reasonably likely to constitute a breach by the board of its fiduciary duties,'' the New York Times reported, citing a regulatory filing.

Oklahoma-based Williams (WMB) has said its offer of $39 a share for Southern Union is superior to the $33 per share Energy Transfer is offering, but Southern Union has not officially said it views the Williams offer as superior.

Combined, Williams and Southern Union would have roughly 30,000 miles of regulated pipelines and give Williams access to shale gas formations, the Times reported. An Energy Transfer-Southern Union tie-up would create one of the largest U.S. pipeline operators.