Elliott Management Corp. proposed to acquire a 100% stake in Denver-based crude oil and natural gas producer QEP Resources Inc. for $8.75 per share in cash, saying the company "remains deeply undervalued" and a sale would be the best way to boost shareholder value.
The asset manager, one of the largest shareholders of QEP Resources, said its takeover offer represents a 44% premium to the company's closing price on Jan. 4, according to a Jan. 7 news release.
"[D]espite the promise of its premium assets, QEP as a public-company investment has not worked, and its stock continues to trade well below its intrinsic value," Elliott Management said in its proposal letter. "We believe that a sale of the company pursuant to the proposal gives shareholders a direct path to realizing a compelling premium for their shares with far greater certainty than if QEP were to remain a publicly traded company."
The proposal is subject to the closing of the sale of QEP Resources' assets in the Haynesville/Cotton Valley shale formations of northwest Louisiana, announced Nov. 19, 2018. However, it is not subject to the completion of the sale of assets in the Williston Basin of North Dakota and Montana, announced Nov. 7, 2018.
Elliott Management, which has about $35 billion of capital under management, expects to fund the proposal with a combination of available cash, assumption of debt and debt financing from third-party lenders.
QEP Resources operates primarily in Texas, Louisiana and North Dakota, and is working to transition into a pure-play Permian Basin-focused producer. Elliott Management owns a 4.94% stake in QEP Resources.