Plains All American Pipeline Discloses Proposal to Acquire SemGroup Corporation for $24.00 per Share in Cash

abarrelfullabarrelfull wrote on 25 Oct 2011 05:43
Tags: deals pipeline plains usa

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Plains All American Pipeline, L.P. (NYSE:PAA) disclosed today that on October 6, 2011 it submitted a proposal to SemGroup Corporation (NYSE:SEMG) ("SemGroup") to acquire all of the outstanding shares of SemGroup for $24.00 per share in cash. The proposal was made orally and in a letter delivered to SemGroup's President and Chief Executive Officer Norman Szydlowski. PAA's proposal is subject to customary documentation and regulatory approvals, but is not subject to a financing contingency.

Under its terms, the proposal represents a premium of approximately 16% to SemGroup's 10-day average closing price through October 5, 2011, the day immediately prior to PAA's proposal, and a premium of approximately 20% over the 10-day average closing price immediately prior to SemGroup's August 31, 2011 announcement of its pending asset sale to NGL Energy Partners LP ("NGL Energy Partners"). Following SemGroup's rejection of and refusal to engage in constructive discussions regarding the October 6th proposal, PAA today sent a letter to SemGroup expressing its continued interest in pursuing the acquisition (the full text of this letter is below). PAA is making the letter public in order to inform SemGroup's stockholders and other stakeholders of the proposal and PAA's commitment to completing a transaction on the proposed terms.

"We are disappointed that SemGroup's Board of Directors has refused to engage in constructive discussions with us regarding a possible transaction," said Greg L. Armstrong, PAA's Chairman and Chief Executive Officer. "Since SemGroup's emergence from bankruptcy in November 2009, its assets and businesses have consistently and materially under-performed the projections in its Plan of Reorganization. We believe that the attractive and certain value we are proposing to deliver to SemGroup's stockholders is greater than any value that might be created on a reasonable timetable from any of SemGroup's other strategic alternatives, including the value attributable to a successful completion of SemGroup's proposed initial public offering of its newly-formed master limited partnership, Rose Rock Midstream, L.P., and its announced transaction with NGL Energy Partners, the expected value of which are already reflected in SemGroup's stock price. Notably, our proposal incorporates and offers to SemGroup's stockholders benefits from cost savings and synergies that we believe PAA is uniquely positioned to realize upon consummation of the proposed transaction."

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