US pipeline company SemGroup rejects rival Plains unsolicited $1 billion bid
25 Oct 2011
US pipeline company SemGroup Corp yesterday rejected an unsolicited $1 billion bid from rival Plains All American Pipeline LP.
SemGroup said that Plains first submitted a takeover proposal on 6 October and again submitted the same proposal on 21 October offering to pay $24 a share in cash, a mere 2-per cent premium over SemGroup stock's closing price of $23.56 on 21 October.
''Consistent with its fiduciary duties, and in consultation with its independent financial and legal advisors, the SemGroup board previously reviewed the unsolicited proposal and determined that it substantially undervalued the Company,'' said SemGroup in a statement.
It also noted that the proposal was opportunistic and not compelling as it fails to adequately reflect SemGroup's bright prospects for stockholder value creation, it added.
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.
Tulsa, Oklahoma-based SemGroup agreed in August to sell its natural-gas liquids unit SemStream to NGL Energy for about $276 million in cash and stock.
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