US natural-gas pipeline operator Energy Transfer Equity LP has once again outbid Williams Cos for the control of smaller rival Southern Union Co by raising its offer to $5.7 billion in cash.

In its latest bid unveiled yesterday, Energy Transfer has offered Southern Union shareholders $44.25 a share or $5.7 billion, redeemable in cash or stock, a 57-per cent premium over Southern Union's closing price on 15 June, the day before the companies first announced the takeover.

The total deal size will be $9.4 billion including assumption of Southern Union's debt of $3.7 billion.

The revised offer sent the shares of Southern Union soaring by about 2.2 per cent to $44.29 a share on Tuesday, giving the company a market value of $5.52 billion.

Energy Transfer's sweetened offer comes less than a week after Williams Cos once again tried to scuttle the agreed deal last month between Energy Transfer and Southern Union, by raising its unsolicited bid by nearly 13 per cent to $5.5 billion. (See: Williams raises bid for US pipeline operator Southern Union to $5.5 billion)

Energy Transfer is battling Williams Cos for the control of Southern Union's 15,000 miles of natural gas and natural gas liquids (NGL) pipelines, which can connect new fields in Texas and Oklahoma to markets in the US Midwest and Florida.

Also at stake are Southern Union's treatment and processing plant in Texas and New Mexico, four cryogenic processing plants with a combined capacity of 415 MMcf/d, and 5 natural gas treating plants with a combined capacity of 585 MMcf/d.

Dallas-based Energy Transfer had first offered to buy Southern Union in an all-stock transaction valued at $33 a share. Williams threw its hat in the ring on 23 June with a $39 a share in cash counter offer. On 5 July, Energy Transfer upped the stake by boosting its offer to $40 per share and Williams responded on 14 July with a $44 a share bid.

To avoid regulatory hurdles because of its size and the similarity of the two companies, Energy Transfer had earlier said it will sell Southern Union's 50-per cent stake in Citrus Corp, which operates the Florida Gas Transmission pipeline system, to its Energy Transfer Partners LP subsidiary.

Houston-based Southern Union owns and operates one of the largest natural gas pipeline systems in the US with more than 20,000 miles of pipelines and one of North America's largest liquefied natural gas import terminals, serving more than half a million natural gas end-user customers in Missouri and Massachusetts.

The deal will see Dallas-based Energy Transfer nearly double its capacity through what is billed as the largest buyout of a pipeline company this year.

Energy Transfer owns and operates a diversified portfolio of energy assets. It has pipeline operations in Arizona, Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Utah and West Virginia and owns the largest intrastate pipeline system in Texas.

The company currently has natural gas operations that include more than 17,500 miles of gathering and transportation pipelines, treating and processing assets, and three storage facilities located in Texas. It also holds a 70-per cent interest in a joint venture that owns and operates NGL storage, fractionation and transportation assets in Texas, Louisiana and Mississippi.

The acquisition of Southern Union will give Energy Transfer with direct ownership of assets that are complementary to the assets owned and operated by its own two master limited partnership subsidiaries, Energy Transfer Partners and Regency Energy Partners.

The combined footprint of both pipeline operator's will include more than 44,000 miles of natural gas pipelines and approximately 30.7 billion cubic feet per day of natural gas transportation capacity, which is nearly half of the natural gas produced in the US, making Energy Transfer among the largest natural gas infrastructure players in the country.

The board of both companies have endorsed the merger, and Energy Transfer holds commitments for about 14 per cent of Southern Union's outstanding shares.

George. Lindemann, chairman and CEO of Southern Union said, "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."