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Microsoft co-founder Allen takes over Plains Resources
Ray Tyson Petroleum News Houston Correspondent
Vulcan Energy, an affiliate of an investment company owned by Microsoft co-founder and billionaire Paul Allen, has closed its $460-million takeover merger of exploration and production independent Plains Resources, just days after shareholders approved a $17.25 per share offer for the company.
The deal also gives Vulcan a stake in a much bigger prize, fast-growing Plains All American Pipeline, a publicly traded master limited partnership (MLP) with over 7,000 miles of gathering and mainline pipelines in Texas, Oklahoma, California and Louisiana and the Canadian provinces of Alberta and Saskatchewan.
Plains Resources owns 44 percent of the general partnership and 12.4 million limited partnership units, which represents about a 24 percent aggregate ownership interest in Plains All American, which also is involved in marketing, terminaling and storage operations.
“We believe Vulcan will be a solid long-term partner and a valuable resource in the continued execution of our business plan,” said Greg Armstrong, chairman and chief executive officer of Plains All American. “Paul Allen’s Vulcan organization is one of the leading private investment firms in the nation.” Bid went up in response to offer from Leucadia National A week prior to the July 22 merger vote, Vulcan agreed to increase its bid for Plains from $16.75 to $17.25 per share, following a competing offer from Leucadia National Corp. amounting to $17 per share.
Leucadia gain countered Vulcan with a revised offer, in which the company said it would barrow about $175 million and use the proceeds to commence a tender offer to purchase Plains’ common stock for $18 per share.
However, Plains’ board of directors concluded that Leucadia’s proposed leverage buyout would not result in “superior value” for Plains stockholders compared to Vulcan’s cash deal. Holders of about 17 percent of Plains’ outstanding common stock were contractually committed to vote for the new deal with Vulcan. Flores, Raymond party to takeover In addition to Microsoft’s Allen, Plains chairman James Flores and company chief executive John Raymond, son of ExxonMobil chairman Lee Raymond, were party to the takeover merger through Vulcan Energy, an affiliate of Allen’s Vulcan Capital.
“We are pleased to have completed the acquisition, Allen said, adding that Plains All American “is the premier crude oil MLP in the industry, with a world-class management team.”
Vulcan’s offer for Plains Resources was valued at around $460 million. The transaction was financed with equity from Vulcan Capital and Plains Resources’ management, a $175 million term loan from Fleet National Bank and a $75 million term loan from Bank of America. Plains Resources is headquartered in Houston, Texas.
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