Plains All American Pipeline drops SemGroup deal

Plains All American Pipeline drops plan to buy SemGroup for $1 billion

Associated Press

HOUSTON (AP) -- Plains All American has dropped its hostile bid for SemGroup five months after the pipeline company began its takeover attempt in a deal valued at around $1 billion.

It was the second takeover attempt by the Houston company for its rival in as many years.

Plains didn't say why it is dropping the deal, a $24-per-share offer that SemGroup called "opportunistic."

However, shares of SemGroup are trading well above the offering price in October, and rose again Tuesday as news of the withdrawal aired.

SemGroup is a smaller pipeline company based in Tulsa, Okla. and operated a little less than 3,000 miles of pipeline. Plains, by comparison, operates 16,000 miles of crude oil and refined product pipelines and gathering systems.

In October, Plains said a tie-up with SemGroup would create a larger, more efficient pipeline network that would cut costs and boost value for shareholders.

Pipeline companies have been jockeying for position in the North American petroleum market as oil production increases. Hundreds of new fields have opened up during the past several years in the U.S. and Canada, thanks to new drilling technologies.

Plains has been shopping elsewhere as well. Earlier this month, the company closed a deal to buy BP PLC's Canadian natural gas liquids business in a deal valued at $1.67 billion.

Shares of SemGroup Corp. rose 10 cents to $29.69 in afternoon trading. Plains All American Pipeline L.P. gained 27 cents to $79.47.

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