June 24, 2011
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Southern Union (NYSE: SUG ) jumped 17% today when Williams (NYSE: WMB ) made a bid to buy the company.
So what: Williams bid of $4.9 billion, or $39 per share, topped an existing bid from Energy Transfer Equity (NYSE: ETE ) to buy the company for $4.2 billion, or $33 per share. With Southern Union’s shares now trading near $40 per share, investors are betting a bidding war will erupt, sending shares higher.
Now what: The question really becomes: What if Energy Transfer Equity makes a bid to top Williams’ price? Betting on buyout offers like that is risky business, but the backstop of $39 per share wouldn’t result in too much downside if another offer doesn’t come through. I’m not buying today, and I’d wait this one out if I owned shares, because the possibility of another bump could lead to an even bigger payday.
Interested in more info on Southern Union? Add it to your watchlist.