Two investors in shares of Southern Union Company (NYSE: SUG) filed a lawsuit in State Court against directors of Southern Union in effort to stop the merger between Southern Union Company and Energy Transfer Equity LP. The plaintiff alleges the board of directors agreed to an offer that is too cheap.
According to the complaint the plaintiffs allege that the board of directors breached their fiduciary duties arising out of their attempt the sell Southern Union Company too cheaply via an unfair process to Energy Transfer Equity.

On Thursday, June 16, 2011, Southern Union Company (NYSE:SUG) and Energy Transfer Equity, L.P. (NYSE: ETE) had announced that the two companies have entered into a merger agreement whereby Energy Transfer Equity, L.P. will acquire Southern Union Company for $7.9 billion, including approximately $3.7 billion of existing SUG debt. Under terms of the agreement stockholders of Southern Union Company (NYSE:SUG) will exchange their common shares (SUG) for newly issued Series B Units of Energy Transfer Equity, L.P. with a value of $33.00 per share, or approximately $4.2 billion. Southern Union Company said the implied value of the Series B Units represents an approximate 17% premium to the closing price of SUG common stock on June 15, 2011.

On June 23, 2011 Southern Union Company (NYSE:SUG) confirmed the receipt of a proposal by The Williams Companies, Inc. (NYSE: WMB) to acquire all of the outstanding shares of Southern Union for $39.00 per share in cash, well above the offer by Energy Transfer Equity, L.P.

Then on July 5, 2011 Energy Transfer Equity, L.P. (ETE) and Southern Union Company (SUG) announced that they have entered into an amended and restated merger agreement under which ETE will acquire SUG for $8.9 billion, including $5.1 billion in cash and ETE common units. Under the terms of the revised agreement SUG shareholders now can elect to exchange their common shares for $40.00 of cash or 0.903 ETE common units.

The plaintiffs alleged in their initial complaint that the directors agreed to a too low price on June 16, 2011. In fact following the merger news on June 16, 2011 shares of Southern Union Company (Public, NYSE:SUG) jumped from $28.26 per share on Wednesday, June 15, 2011 to $33.71 on Thursday and $33.56 on Friday, June 16, 2011, thus well above the inital offer of a value of $33 per share.

SUG stocks rose in open market on July 5 to $41.63 per share, thus again succeeding the $40 offer from July 5, 2011.

Furthermore, the plaintiffs alleged that the proposed transaction for a value of $33 per SUG share will deny Southern Union’s shareholder adequate consideration in light of the company’s growth, anticipated operation results, net asset value and future profitability. In fact, Southern Union Company has performed well for its investors in recent years. Its 12months Total Revenue increased from $2.17billion in 2009 to $2.48billion in 2010. Its Net income from 2009 to 2010 rose from $179.58million to $221.25million. Its first quarter Net Income rose from $56.46million for the first quarter in 2010 to $60.66million in the first quarter in 2011.