"does this mean the SUG takeover is off?"
IMHO it is quite the opposite; ETE is trying to sweeten the deal for SUG. ETE has had fairly weak distribution growth recently, especially for a GP; a total of 6.6% in the 2 year period 5/2009 to 5/2011. Their SUG offer is mainly equity. I think they are trying to back up what they have been probably telling SUG for a while; their distributions will start to rise which will make the equity offer much better.