Energy Transfer Will ‘Not Rule Out’ Talks With Williams

Energy Transfer Equity, L.P., which is buying Southern Union Co. (SUG) for $5.1 billion, is willing to consider selling some of its pipelines to rival bidder Williams Cos., Energy Transfer Chief Executive Officer Kelcy Warren said during a conference call today.

“"I would not rule that out,” Warren said. “Probably some of the assets fit them as well as or better than us.”

Energy Transfer, based in Dallas, talked with Williams in October about the rival company buying some of Southern Union’s pipelines, according to a filing. Warren said no talks were taking place now.

Southern Union’s shareholders are scheduled to vote on Energy Transfer’s buyout bid on Dec. 9. Energy Transfer offered to buy Southern Union in June, and raised its offer twice to counter bids from Williams. Energy Transfer’s final offer was $44.25 in cash and equity.

Williams, based in Tulsa, Oklahoma, may be interested in buying some of the pipelines, although the company wants to be “disciplined” about its spending, CEO Alan Armstrong said on a conference call yesterday.

“We think we know what they’re worth,” he said of Southern Union’s pipelines. “We think we’re the right buyer for a certain portion.”

Competing for Assets

Both companies are vying for Houston-based Southern Union’s 15,000 miles of natural gas pipelines, which connect new production fields in Texas and Oklahoma with markets in the U.S. Midwest and Florida.

Energy Transfer reported net earnings of $68.9 million during the third quarter, or 31 cents per unit, compared with a loss of $15.3 million, or 7 cents per unit, in the year-earlier quarter.

Energy Transfer rose less than 1 percent to $36.37 at 11:17 a.m. in New York. Southern Union fell less than 1 percent to $41.68 and Williams rose 1.3 percent to $30.60.

To contact the reporter on this story: Mike Lee in Dallas at mlee326@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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