Everyone Wants a Piece of Southern Union Now

Last week Williams Companies Inc. (NYSE:WMB) made a $4.9 billion bid to acquire Southern Union Company (NYSE:SUG), a business that operates natural gas pipelines in the South and Mid-West regions of the U.S. Williams’ bid came in response to a prior bid by a company called Energy Transfer Equity (NYSE:ETE), which had made a $4.2 billion dollar offer on Southern Union. New York Times (NYSE:NYT) Dealbook is now reporting that Energy Transfer is moving to block the Williams buyout.

Apparently Energy Transfer is feeling bitter, and sent this letter to the board at Southern Union, “[the company] is not permitted by the merger agreement to engage in any discussions or negotiations with Williams.” Further, it stated that Southern Union could not hand over “non-public information” to Williams.” (So. Union had already reached a deal with ETE before Williams swooped in with a better offer). The letter continues, “[Energy Transfer] does not believe that the board can conclude, in good faith, that the Williams proposal constitutes, or is reasonably likely to result in, a superior offer.”

It is unclear now which company Southern Union will side with in the proposed buyout. Williams (NYSE:WMB) has offered significantly more financial compensation, though the petitioning from Energy Transfer (NYSE:ETE) seems to be exerting some influence over the So. Union board, which recently mailed this letter to Williams’ CEO Alan Armstrong, “Had you indicated during our meeting on January 31, 2011 that Williams’ indication of interest (subject, as you said, to a range of contingencies and due diligence) was actually $39 rather than the $30 that you told us, our Board may have had a more “affirmative” response for you. Also, Williams’ indication was lower than another indication that the Board was seriously considering at that time from another party (not ETE) that did not require the range of contingencies you expressed as a concern.”

Other Energy Companies to Watch: EQT Corporation (NYSE:EQT), Marathon Oil Corporation (NYSE:MRO), Cheniere Energy, Inc. (AMEX:LNG), Chevron Corporation (NYSE:CVX), Southwestern Energy Co. (NYSE:SWN), Kinder Morgan Energy Partners LP (NYSE:KMP), Occidental Petroleum Corp. (NYSE:OXY), Chesapeake Energy (NYSE:CHK), ConocoPhillips (NYSE:COP), BP plc (NYSE:BP) and Questar Corporation (NYSE:STR)

Stay tuned to see how the drama plays out…

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