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Icahn rips SandRidge for 'poison pill' he says stifles dissent on merger

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Icahn rips SandRidge for 'poison pill' he says stifles dissent on merger

Billionaire investor Carl Icahn blasted the board of SandRidge Energy Inc. for adopting a "poison pill" measure he said is designed to stifle shareholders who want to block a pending $746 million merger with fellow driller Bonanza Creek Energy Inc.

The action would "make a totalitarian dictator blush," Icahn said in a letter filed with the SEC, adding that he will see the company in court if its shareholder-rights plan is maintained.

Icahn sent his letter the morning of Nov. 30 and shortly after was on television network CNBC saying the provision, which puts conditions on stock buys by major shareholders, is designed to keep shareholders from talking to one another. "This makes a banana republic look good," Icahn said.

"The proposed value-destroying Bonanza acquisition, together with your blatant attempt to strip shareholders of the right to campaign against the transaction — while preserving that right for yourselves — have convinced us that you do not have the best interests of shareholders at heart," Icahn's letter to the board said.

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"Our independent board thoroughly evaluated and unanimously supports the Bonanza Creek transaction," SandRidge said Nov. 30. "We look forward to filing our proxy materials before year end, which will give shareholders the ability to fully review the merits of the transaction."

In addition to warning of a court fight over the legality of SandRidge's rights plan under Delaware corporate law, Icahn renewed his threat to start a proxy fight designed to replace the entire board of directors at SandRidge. "We are frankly frightened that more value destruction may be in store if shareholders do not revolt against this oppression," Icahn said in his letter.

On CNBC, Icahn attacked SandRidge CEO James Bennett for his pay and performance. "Bennett presided over the destruction and the loss of over $5 billion," Icahn said. "The shareholders got nothing, zero, and during this period, Bennett has taken $50 million for himself," Icahn said while claiming Bennett was instrumental in awarding former CEO and Chesapeake Energy Corp. co-founder Tom Ward $90 million when Ward was fired in 2013. SandRidge, which had long struggled with debt, emerged from Chapter 11 bankruptcy protection in October 2016.

Icahn Capital LP is SandRidge's largest shareholder, with a 13.5% stake. Another activist fund, Fir Tree Partners, is the shale oil and gas driller's third-largest shareholder, with an 8.2% stake. Both are opposed to the cash and stock purchase of Bonanza, which Icahn said Nov. 30 is "dilutive, overpriced and value-destroying."

"Fir Tree Partners, who I don't know, never met, also own a fair amount of this company, and they are pretty enraged" by the deal, Icahn said on CNBC. SandRidge's second-largest shareholder, Guggenheim Partners LLC, with a 12.4% stake, has not responded to questions on where it stands.

SandRidge management maintains that buying Bonanza would add to its core acreage position in the Mississippian Lime play of southern Kansas and northern Oklahoma and give it another oil-rich field in Colorado that is geologically similar to SandRidge's holdings more than 100 miles away. The purchase would add more oil to SandRidge's production mix. Bonanza would add 15.8 million barrels of oil equivalent per day (52% oil) to SandRidge's 38.8 MMboe/d of volumes (27% oil), the Oklahoma company has said.