By Jim Polson
Sandell Asset Management Corp. said it will seek changes to the board of pipeline owner Spectra Energy Corp. at the 2014 annual meeting if the company fails to “promptly” follow its plan for increasing shareholder value.
Spectra must take further steps including reviewing strategic alternatives for its Canadian operations and for DCP Midstream LLC, Sandell Asset said in a letter to the board today. If the Houston-based company fails to act, “we intend to pursue a change to the composition of the board at the next annual meeting,” according to the letter.
“We prefer to have a constructive dialogue,” Thomas Sandell, chairman and chief executive officer of the hedge fund, said today in an interview today on Bloomberg Television. “If need be, we will take any action to realize shareholder value.”
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Spectra, which announced last week it will sell U.S. assets to a publicly traded partnership it controls, has so far carried out a third of the fund’s plan, Sandell said in the interview. The hedge fund is also calling for cost cuts. Sandell Asset said it is part of an investor group that is one of Spectra’s largest shareholders.
“Our board and management team regularly evaluate strategic options to profitably grow the company,” Caitlin Currie, a company spokeswoman, said in an e-mailed statement today.
The company’s size, scale and balance sheet from its current corporate structure “are significant drivers supporting Spectra Energy’s successful execution of the more than $25 billion in natural gas expansion opportunities and also the significant incremental crude oil growth opportunities ahead,” Currie wrote.
Spectra rose 0.3 percent to $34.43 at 12:24 p.m. in New York. Spectra Energy Partners gained 0.7 percent to $42.07. The shares have risen 14 percent and 13 percent, respectively, since the sale of U.S. assets to the partnership was announced June 11.