Plains All American makes hostile bid for SemGroup

Houston-based Plains All American Pipeline, L.P. has made a hostile bid for SemGroup Corporation in an offer worth about $1 billion, following a failed attempt to court SemGroup’s board.

Plains All American disclosed in a statement Monday that it offered $24 per share in cash on Oct. 6 to acquire the Tulsa-based pipeline company. SemGroup’s stock closed at $20.10 on Oct. 5.

SemGroup board members rejected the bid and shut down communication, according to Plains All American. The company also rejected a $17-per-share offer in March 2010.

Plains All American Chariman and CEO Greg L. Armstrong took his appeal to SemGroup’s shareholders Monday by publicly releasing a letter to SemGroup’s leaders.

“We are disappointed by your Board’s unwillingness to engage in constructive discussions about our proposal,” Armstrong wrote. “We believe our proposal offers attractive value for your stockholders that is greater than any value that might be created on a reasonable timetable from any of the SemGroup’s other strategic alternatives.”

SemGroup responded with a public statement Monday afternoon, saying the bid substantially undervalued the company and its potential. The company announced in August that it would sell its SemStream subsidiary  to NGL Energy Partners for cash and equity interest.

SemGroup emerged from bankruptcy in late 2009 with $500 million in exit financing facility, according to a company statement dated Dec. 1 2009. The company operates a network of pipelines and terminals that transport and process crude oil, natural gas and asphalt.

SemGroup stock was up $4.25 to $27.50 on the New York Stock Exchange by midday Monday.