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July 22, 2011 6:54 PM

Deals Update: ETE and Southern Union Agree to Merger . . . Again

Posted by Tom Huddleston Jr.

The battle between Energy Transfer Equity and Williams Companies for control of Southern Union Company continued this week, with the immediate result being a renewed and revised merger agreement between ETE and Southern Union.

ETE upped its bid for Houston-based Southern Union another $800 million, bringing the offer to $5.9 billion. The Southern Union board accepted the increased bid—which was aimed at countering the latest Williams proposal of $5.5 billion—and entered into a merger agreement with ETE, the companies announced Tuesday.

Dallas-based ETE initially entered into a merger agreement with Southern Union in mid-June when it bid—and Southern Union—$4.2 billion. Since then Tulsa, Oklahoma–based Williams and ETE have engaged in a volley of competing offers. (All three companies operate oil and gas pipelines.)

Roughly 14 percent of Southern Union's shareholders support the latest agreement with ETE, Bloomberg reports.

As The Am Law Daily has noted in previous coverageLocke Lord Bissell & Liddell is advising Southern Union on the matter, Roberts & Holland is acting as local counsel. Latham & Watkins and Bingham McCutchen, meawhile, are serving as lead counsel to ETE. Delaware firm Potter Anderson & Corroon has also been advising ETE, according to the company.

The joint ETE–Southern Union press release announcing the latest merger agreement also notes that Sullivan & Cromwell and Morris Nichols Arsht and Tunnell are providing legal advice to the special committee of the Southern Union board that is reviewing the various offers. S&C's team includes corporate partners Joseph Frumkin and George Sampas, partner Yvonne Quinn, who is advising on antitrust matters, and special counsel Tia Barancik.

Cravath, Swaine & Moore and Gibson, Dunn & Crutcher are acting as cocounsel for Williams.

In other deals news . . . 

-- A week after the Clorox Company rejected Carl Icahn's $10.2 billion takeover bid and adopted a poison pill shareholder rights plan, Icahn upped his offer to $10.7 billion and publicly rebuked Clorox board members.

In raising his bid for the consumer products giant to $80 a share from $76.50, Icahn ripped into the Clorox board for calling his initial offer "neither credible nor adequate." In a letter filed with the Securities and Exchange Committee, Icahn described the board's statement as "disingenuous."

Clorox has hired Wachtell, Lipton, Rosen & Katz to represent it against Icahn. Wachtell and name partner Martin Lipton have faced off against Icahn in multiple corporate takeovers and boardroom proxy battles.

As we noted last week, Wachtell's team advising Clorox includes corporate partners Andrew Brownstein, Steven Cohen, and Benjamin Roth. Icahn is advised by his associate general counsels, Keith Schaitken and Mark DiPaolo, from Icahn Associates.

Icahn made news on another matter this week when he urged Motorola Mobility to sell off patents to improve shareholder value. In a filing with the Securities and Exchange Commission, Icahn, a Motorola shareholder, cited precedent in referring back to Nortel's record-breaking patent sale earlier this month as a reason to heed his advice.

-- The Toronto Stock Exchange said on Thursday that it will enter talks with the Maple Acquisition Group, the consortium of investors that made a hostile bid for the exchange in May.

TMX Group, which owns the exchange, saw its proposed $3.4 billion merger with the London Stock Exchange fall apart at the end of June, four months after they originally reached an accord and just one day before TMX shareholders were set to vote on the transaction. The TMX board withdrew from the deal when it became clear it could not win a shareholder vote to approve the transaction.

Maple Group--a consortium of Canadian banks and financial firms--has a $3.9 billion offer on the table for TMX. The group came together amid concerns that a TMX/LSE merger would be detrimental to the Canadian financial community and could result in too much European control over the Canadian market. TMX already rejected one bid from Maple, in May, worth $3.7 billion.

TMX has been advised during the sale process by Allen & Overy and Torys, in Canada.

Paul, Weiss, Rifkind, Wharton & Garrison is serving as U.S. counsel to Maple Group, with Davies Ward Phillips & Vineberg and Blake Cassels & Graydon brought on as Canadian cocounsel. Weil, Gotshal & Manges and Canadian firm McCarthy Tétrault were also advising on that side.

-- The U.S. Department of the Treasury has sold off its remaining stake in Chrysler Group, officially ending the government's partial ownership of the carmaker that began as a bailout in 2009, Treasury announced Thursday.

The Am Law Daily reported on June 3 about the agreement under which Fiat SpA would buy from the U.S. Treasury the 6 percent stake the government still held in Chrysler. That agreement calls for Fiat to pay a total of $575 million, $15 million of which goes to the Canadian government, and a portion of which buys rights to purchase Chrysler shares owned by a trust of the United Automobile Workers.

Now that the transaction has closed, the government has officially sold off any control of the U.S. automaker. Fiat has had management control of Chrysler since 2009, when it agreed to purchase a 35 percent stake and the Obama administration orchestrated a takeover by Fiat executive Sergio Marchionne.

The government committed a total of $12.5 billion of taxpayers' money to Chrysler and received only $11.2 billion in return. It is unlikely the department will recover the difference of $1.3 billion, according to the statement.

Chrysler was represented in the deal by Sullivan & Cromwell, while Fiat turned to Willkie Farr & Gallagher.

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