The purchase will bolster the company's pipeline ambition as it crosses with other competitors in acquisition talks. With BP's Canadian natural gas liquids operations, Plains will pick up 4,000 kilometers of pipelines and 21 million barrels of storage capacity in Canada. Overall, Plains operates over 16,000 miles in pipelines.
SemGroup's Board of Directors rejected an unsolicited October bid of $24 per share in cash for the Tulsa based energy transporter, terminal and storage company. In its statement rejecting the hostile offer, SemGroup pointed to its stock value nearly 20% higher than Plains's bid. About the bid, Semgroup said it "continues to believe that your current proposal is opportunistic and fails to adequately reflect SemGroup's bright prospects."
It isn't the first time Plains has made a low priced bid for Semgroup and it's just another chink in a multi-year takeover drama.The now quashed hostile bid was a culmination of almost two years of opposition by Plains to SemGroup's recovery strategy from a 2009 bankruptcy and resulting civil litigation with the Securities and Exchanges Commission. In March 2010, Plains offered to buy SemGroup out of bankruptcy for $17 a share. The offer that was rejected by SemGroup's board and company instead went public in November 2010 and priced at over $24 a share on the first day of trading. In August, SemGroup announced it would raise $181 million by doing a public offering for Rose Rock Midstream -- previously the storage and pipeline division of the company that holds a crude storage facility at the delivery point for West Texas Intermediate in Cushing, Oklahoma. SemGroup also announced a spin of its SemStream businesses and said that the proceeds of both transactions would be used to pay down the company's $343 million in debt. Plains's takeover offers are a rebuff to SemGroup's spin strategy and its overall post-bankruptcy planning. -- Written by Antoine Gara in New York