Plains All American Pipeline withdraws $1 billion offer for SemGroup

Plains All American Pipeline yesterday withdrew a $1-billion unsolicited offer to buy SemGroup Corp, after its smaller rival rejected the offer for having offered a mere 2-per cent premium.

Houston, Texas-based Plains in late October 2011 made an unsolicited takeover offer of $24 a share in cash, a mere 2-per cent premium over SemGroup stock's closing price of $23.56 on 21 October.

The board of Tulsa, Oklahoma-based SemGroup rejected the offer saying it substantially undervalued the company, and adopted a shareholder rights plan, or a "poison pill", that would prohibit an acquirer to buy more than 10 per cent of its shares without the board's consent.

Plains did not provide a reason for withdrawing its offer and said in a statement that it wouldn't comment further. SemGroup's shares have hovered a little above the $24 a share offer since the bid was announced.

SemGroup, once the 14th-largest privately held US company, owns a 620-mile pipeline network in Kansas and Oklahoma and a 51-per cent stake in a 527-mile pipeline that transports crude oil from Colorado to Oklahoma.

SemGroup agreed in August 2011 to sell its natural-gas liquids unit SemStream to NGL Energy for about $276 million in cash and stock.