Plains All American Pipeline LP is taking a $1 billion cash bid for SemGroup Corp. directly to that company’s shareholders after Sem Group’s board rejected its offer.
Plains, which owns 16,000 miles of pipelines, disclosed the $24-a- share proposal in a letter Monday to SemGroup’s management. The bid represents a premium of 1.9 percent to SemGroup’s closing stock price Friday and is 13 percent over the average price during the past 20 trading days.
SemGroup’s board “refused to engage in constructive discussions,” Greg Armstrong, chairman and chief executive of Houston-based Plains, said in a statement. Armstrong said in the letter that SemGroup’s board also had rejected a March 2010 bid of $17 a share.
SemGroup, based in Tulsa, Okla., rose nearly 20 percent, or $4.71, to close at $28.27 in New York. Before Monday, its shares had fallen 13 percent this year.
SemGroup filed for bankruptcy protection in 2008 after $2.9 billion in trading losses.
