SemGroup drops after suitor Plains agrees to buy BP assets
BY JIM POLSON Bloomberg News
Friday, December 02, 2011
12/02/11 at 5:16 AM
Read the Tulsa World’s coverage of the SemGroup collapse and recovery.Original Print Headline: SemGroup stock dips 7 percent
Tulsa-based SemGroup Corp., target of a $1 billion buyout attempt by Plains All American Pipeline LP, saw its stock price drop nearly 7 percent Thursday after Plains agreed to pay $1.67 billion in cash for BP Plc's Canadian gas-liquids operations.
Shares of the oil transportation and storage company lost $1.96 to close at $26.19 on the New York Stock Exchange.
Houston-based Plains announced it would acquire from BP 2,500 miles of pipelines, 21 million barrels of storage capacity and three plants that separate gas liquids such as propane, a fuel, and ethane, a plastics ingredient.
The pipeline company previously offered SemGroup's shareholders $24 a share, or $1 billion, after the SemGroup board rejected the offer or "constructive discussions," Plains said in an Oct. 24 statement. SemGroup closed at $23.45 the trading day before that announcement. Plains reiterated the $24 a share offer for SemGroup on Nov. 16.
"It wasn't going to get done at $24 with SemGroup trading at $28," Bernard Colson, a Kansas City, Mo.-based analyst for Oppenheimer & Co., said Thursday in an interview. SemGroup closed at $28.15 on Wednesday. Colson rates Plains "outperform," doesn't rate SemGroup and owns neither.
"If you don't have that supporting bid at $24, people are kind of questioning whether anyone else will step in," he said.
SemGroup, which owns 2,800 miles of pipelines along with crude-oil storage tanks, said the bid undervalued the company. On Oct. 28, SemGroup adopted a shareholder rights plan designed to fend off a hostile bid.
Plains CEO Greg Armstrong, speaking Thursday on a conference call for investors, declined to discuss the offer for SemGroup, citing advice from lawyers.
Liz Barclay, a spokeswoman for SemGroup, declined to comment.
SemGroup announced Thursday it plans to raise about $140 million from an initial public offering of Rose Rock Midstream LP, owner of storage terminals and pipelines in Oklahoma, Kansas and North Dakota. Rose Rock will offer 7 million shares at $19 to $21 each.
Shares of Plains rose 1.7 percent to close at $65.98.