Legal action continues in merger fight

Friday, May 21, 1999 | 10:16 a.m.

Southern Union Co. of Austin, Texas, appealed a federal judge's order temporarily blocking it from pursuing its hostile takeover bid for Las Vegas-based Southwest Gas Corp.

U.S. District Judge Sven Erik Holmes of Tulsa, Okla., issued a preliminary injunction against Southern Union on Wednesday blocking it from trying to influence a shareholder vote on the proposed merger between Southwest and ONEOK Inc. of Tulsa. Southern Union immediately asked the 10th Circuit Court of Appeals in Denver for a stay of that order. The vote has not been scheduled.

Southwest says the order enforces terms of an agreement between it and Southern Union, whereby the Texas company would receive access to confidential books and records at Southwest if it did not directly appeal to Southwest's shareholders.

Southern Union has offered to pay $33.50 per share for Southwest. Southwest's board has rejected that bid, instead accepting ONEOK's offer of $30 per share. Southwest argues that ONEOK is a financially stronger company, and that a merged Southwest-Southern Union would be too leveraged to finance necessary expansion.