Newspaper article THE JOURNAL RECORD

Tulsa-Based SemGroup Rejects Plains All American Takeover Offer

Newspaper article THE JOURNAL RECORD

Tulsa-Based SemGroup Rejects Plains All American Takeover Offer

Article excerpt

SemGroup Corp. rejected a $1 billion unsolicited acquisition proposal from Plains All American Pipeline LP on Monday.

Plains said Monday that on Oct. 6 it submitted a $24-per-share, all-cash proposal to SemGroup and that the proposal represented a 16- percent premium to SemGroup's 10-day average closing price through Oct. 5. The proposal was about a 20-percent premium over the 10-day average closing price immediately prior to SemGroup's Aug. 31 announcement of its pending asset sale to NGL Energy Partners LP.

The stock market believes Plains will have to pay more for SemGroup, said M. "Jake" Dollarhide, CEO of Tulsa's Longbow Asset Management.

SemGroup shares climbed 19.99 percent, or $4.71, to close at $28.27 on the New York Stock Exchange on Monday. Plains shares increased $1.11, or 1.74 percent, to close at $65.

"The market believes that SemGroup shareholders will pressure Plains to pay more," Dollarhide said.

Katie Michaels-Johnson, portfolio manager for Tulsa-based Fredric E. Russell Investment Management Co., said the 16-percent premium was not bad.

"But SemGroup put a lot of work into the creation of Rose Rock Midstream and its partnership with NGL," Michaels-Johnson said.

In a press release later on Monday, SemGroup said the Oct. 6 unsolicited proposal was too low, representing only a 2-percent premium compared to Friday's closing price.

"The SemGroup board previously reviewed the unsolicited proposal and determined that it substantially undervalued the company," SemGroup said in a statement.

Still, Plains seems determined, Michaels-Johnson said.

"We'll see how it all shakes down," Michaels-Johnson said. "What a turnaround for SemGroup since 2008."

SemGroup emerged from bankruptcy in December 2009. This year, the company posted a second-quarter net loss of $12.3 million on revenue of $344.2 million.

Plains said it started bidding for SemGroup in March 2010 with a proposal of $17 per share.

Plains said it was making its latest letter to SemGroup public to inform stockholders and other stakeholders of the proposal.

"Plains thinks it might go around the board and directly to the shareholders," Dollarhide said. …

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