Billionaire Tom Sandell Pushing For Sale of SemGroup Corp (SEMG)

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SemGroup Corp (NYSE:SEMG) responded to the initial letter on Tuesday, saying that they value the input of their shareholders and are doing what they can to maximize shareholder value, including some of the simplification strategies that had previously been recommended. That included dropping their oil assets into their MLP, Rose Rock Midstream LP (NYSE:RRMS) in the first quarter of this year. They also reiterated a plan to drop down their U.S gas assets at some point in the near future.

For their part, Sandell did not take too kindly to that response, calling it a “canned reply”, and bristling in particular at SemGroup Corp (NYSE:SEMG)’s vague suggestion that some of Sandell’s recommendations could be harmful to the company, saying they were “disturbed” by that comment, and that such talk was nothing but scare-tactics. Sandell intimated that they felt SemGroup’s lawyers played a part in the response, so as to best “thwart” their activist investing.

Sandell went out swinging this time, saying in closing that they would make full use of their power as the “true owners of the company” if need be, and take aim at some of SemGroup’s directors. As they pointed out, the charter and by-laws of SemGroup give the shareholders the power to do just that, removing directors with or without cause through a simple majority vote.

Other major hedge fund shareholders of SemGroup Corp (NYSE:SEMG)’s, who could play a major role in any such moves, include David Cohen and Harold Levy’s Iridian Asset Management, which owns 3.58 million shares according to a filing today with the SEC, Stuart J. Zimmer’s Zimmer Partners, which owned 1.06 million shares as of September 30, and Israel Englander’s Millennium Management, which owned 885,801 shares, also as of September 30. Overall, hedge funds tracked by  Insider Monkey owned around 25% of SemGroup’s outstanding shares (see the list here). Given the fact that other institutional investors started supporting activists’ campaigns at an increasing rate in recent years, Sandell may get significant support from other shareholders in a proxy fight.

Disclosure: None

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