Pipeline company Plains All American Pipeline LP made an unsolicited $1 billion bid for rival SemGroup Corp, which has already rejected Plains' offer.
Plains said Monday it would pay $24 a share to acquire SemGroup — only a 1.9 percent premium over SemGroup's Friday close of $23.56.
Shares of SemGroup rose 15 percent to $27.15 in early New York Stock Exchange trading, meaning investors are looking for a higher bid.
According to Plains, the total enterprise value of its bid is more than $1.24 billion.
Plains said it would be willing to consider increasing its bid if it can get access to SemGroup's financial information, but that SemGroup's board has been unwilling to engage in discussions about the proposal first submitted Oct. 6.
SemGroup's assets include 620-mile pipeline network in Kansas and Oklahoma, a 51 percent stake in a 527-mile pipeline that transports crude oil from Colorado to Oklahoma and a crude oil storage facility in Cushing, Oklahoma.
Once the 14th-largest privately held U.S. company, SemGroup was forced to file for bankruptcy protection in 2008 under the weight of heavy trading losses on energy futures and derivatives. Last week, SemGroup co-founder Thomas Kivisto agreed to give up more than $1.3 million to settle U.S. Securities and Exchange Commission charges that he misled investors about liquidity risks from his energy trading.
Plains said that SemGroup has underperformed expectations since its 2009 emergence from bankruptcy.
"We continue to believe ... that on a stand-alone basis SemGroup will continue to fall materially short of expectations," Plains Chief Executive Greg Armstrong said in a letter to Plains' board.
In August, SemGroup agreed to sell its SemStream LP unit for about $282 million in cash and stock to NGL Energy Partners LP. That deal also calls for SemGroup to take a 7.5 percent interest in the general partner of NGL Energy.
If Plains is successful in grabbing SemGroup, it would follow a number of other large U.S. pipeline deals this year, including Kinder Morgan's $21 billion takeover of El Paso Corp and Energy Transfer Equity's more than $5 billion deal for Southern Union.
Plains has hired Evercore Partners to advise on its bid.
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