The combined company will have more than 44,000 miles of natural gas pipelines and about 30.7 billion cubic feet per day of natural gas transportation capacity.
Dallas-based Energy Transfer said Thursday it will pay $33 a share for Southern Union, a 17% premium to Southern Union’s closing stock price on Wednesday.
Southern Union shares surged 15% to $32.50 in premarket activity. They last traded above the offer price in the middle of 2007, though they have risen 17% so far this year.
Energy Transfer would also assume $3.7 billion in Houston-based Southern Union’s debt, boosting the overall transaction value to $7.9 billion.
Energy Transfer said it has identified about $100 million in commercial and operational synergies as well as an additional $25 million in one-time savings.
“The acquisition of Southern Union will significantly enhance and diversify ETE’s cash flow profile, making this transaction accretive to ETE’s unitholders while preserving our commitment to maintaining investment-grade credit metrics at ETP and SUG and achieving investment grade status at Regency,” said Energy Transfer Chairman Kelcy Warren.
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