April 18, 2012 [Wall Street Journal] - Plains All American Pipeline withdrew its roughly $1 billion hostile bid for pipeline company SemGroup Corp. Tuesday, effectively ending an effort to take over its smaller rival in the oil hub of Cushing, Okla.
The move is the latest in a sector that has experienced a flurry of merger-and-acquisition activity in the past year, as the North American oil-and-gas boom required a change in pipeline routes. Kinder Morgan Inc. is expected to close soon on its $ 21.1 billion acquisition of El Paso Corp.
Plains made its unsolicited $24-a-share cash offer to SemGroup in October. It marked a bid by the company to expand in Cushing, an increasingly important storage hub amid the U.S. oil-production boom.
SemGroup operates storage facilities in Cushing and pipelines that stretch to the Oklahoma town from oil-producing regions in western Canada. It had rejected Plains’s offer as too little.
SemGroup later adopted a “poison pill” strategy that would dilute the holdings of anyone who acquired a 10% stake in the company. SemGroup in December also spun off its Rose Rock Midstream LP segment, a move that Plains had opposed.
Plains had reiterated its proposal as recently as November in a letter to SemGroup’s management. Plains declined to provide further comment.
