Both sides applaud LV merger ruling

Monday, June 25, 2001 | 11:15 a.m.

ONEOK Inc. of Tulsa, Okla., and Southern Union Co. of Austin, Texas, each claimed legal victory Friday, following a federal judge's order in a web of lawsuits surrounding Southwest Gas Corp.'s failed merger attempt.

Until early 2000, Las Vegas-based Southwest Gas had planned to merge with ONEOK in a $1.8 billion deal. The company had shunned an unsolicited takeover offer by Southern Union, despite the fact Southern Union had offered more money.

Southern Union sued, charging ONEOK and Southwest with illegally interfering with its takeover efforts. In particular, Southern Union claimed officials with the companies improperly influenced Arizona regulators to try to turn them against Southern Union.

As these claims developed, ONEOK broke off the merger in January 2000, claiming Southwest Gas had acted improperly. Now, Southern Union, ONEOK and Southwest Gas all have claims pending against each other in Arizona federal court.

On Thursday, Arizona federal judge Roslyn Silver issued an order in the case dismissing Southern Union's claim that ONEOK conspired to fraudulently induce Southern Union into entering into a confidentiality agreement with Southwest Gas in connection with its takeover offer. Silver also dismissed Southern Union's claims that ONEOK had interfered with Southern Union's rights under this agreement.

Silver did not, however, dismiss Southern Union's claims against: ONEOK for interference with a prospective business relationship; Southwest Gas for fraudulent inducement and bad faith breach of contract; and Arizona Corporation Commissioner James Irvin and former ACC Executive Secretary Jack Rose, saying they weren't immune from civil liability if they engaged in "unlawful conduct."

Southern Union announced the decision in a press release headlined, "Southern Union Wins Major Court Battle." It mentioned all of the charges that had survived, but failed to mention Silver had dismissed any of Southern Union's charges.

"We are delighted with the court's decision," said Southern Union Treasurer George Yankowski. "It clears the way for Southern Union's case to proceed to trial in November of this year."

ONEOK also declared victory, playing up the charges that had been dismissed, though it did note that one charge remained.

"We are pleased the court has dismissed all but one of Southern Union's claims against the company," ONEOK Chief Executive David Kyle said. "We plan to file a motion for summary judgment on that claim and are hopeful it will be granted."

The two companies agreed on one item -- the case will go to trial Nov. 12 in Phoenix.