Dallas – Shares of Houston Exploration Co. jumped Monday after hedge fund Jana Partners LLC announced it was bidding for the rest of the oil and gas exploration and production company with operations in Texas and the Rocky Mountains.
Houston Exploration’s management said it would review the offer but advised shareholders to take no immediate action on Jana’s offer of $62 per share, a 13 percent premium over the company’s closing stock price Friday. Jana already owns 12.3 percent of Houston Exploration and is its second-biggest shareholder.
The shares rose $3.32, or 6.1 percent, to close at $57.97 Monday on the New York Stock Exchange.
The hedge fund’s offer would value the entire company at about $1.8 billion.
Jana expressed frustration with the company’s strategy of growing through acquisitions. The hedge fund said it had asked Houston Exploration to buy back $650 million of its own shares and consider putting itself up for sale, but that the company’s management declined.
“We believe there is still tremendous value in Houston Exploration, but that it will continue to be destroyed as long as the company remains in the hands of those who show far less interest in maximizing this value than they do in transferring it to the company’s management,” said Jana managing partner Barry Rosenstein in a letter to Houston’s board.
Jana, which manages more than $5 billion in assets, said it gave Houston Exploration nearly three months to examine its review of the company, and it asked to begin immediate discussions on an acquisition.
Houston Exploration said in a statement that its board “will meet in due course” to discuss the Jana offer. In the meantime, it asked shareholders to take no action on the hedge fund’s offer.
Jana said it had asked shareholders to withhold votes for Houston Exploration’s directors at the company’s annual meeting in April, and that about 30 percent of votes were withheld for board members. Jana also said it believes executives are being overpaid.
The Houston-based company has hired Lehman Brothers Inc. and the law firm of Akin Gump Strauss Hauer & Feld LLP to advise it.
