Shares of SandRidge Energy Inc. (SD) are up more than 3.5%, to just over $6 each, in the midst of putsch by activist shareholder TPG-Axon Partners LP, which owns 6.5% of the energy producer.
On Friday, TPG-Axon fund manager Dinakar Singh sent a letter to SandRidge’s board asking for rules that could see directors removed immediately and without cause. The move would help with “clearing the way for the company to be sold,” according to Bloomberg.
Early this morning SandRidge said it has set Dec. 13 “as the record date for the determination of the Company’s stockholders who are entitled to execute, withhold or revoke consents relating to the proposed TPG-Axon Consent Solicitation.”
SandRidge’s stock has seen an 80% fall since its IPO in November 2007, and Singh says today’s price is at least half of what he thinks it should be.
Friday’s letter was the second Singh sent last month, following his Nov. 8 missive which lashed out at the board. The whole things is worth a read, so take a look for yourselves, but here’s a sample paragraph:
One fact summarizes the appalling corporate governance practices of SandRidge � despite the single worst stock performance of any energy company, and among the worst stock performances in the entire US market, and massive discounts applied to the company because of management�payments to�[CEO Tom] Ward from the company have totalled approximately $150 million over the past five years (astonishing, given the $3 billion market capitalization of the company).��
In each year since the IPO, compensation to Mr. Ward has represented a sizable portion of company cash flow and earnings.��Upon examining corporate governance at SandRidge, one can understand why stock performance has been remarkably poor, and the �management discount� applied to the stock by the market is very high.��Management�s incentives have been to take value from shareholders, rather than grow value for shareholders, and that is the only area in which they have done a spectacular job.
Analyst Duane Grubert at Susquehanna suggested in a note Monday this shareholder push could pave the way for a sale, and named Devon Energy Corp. (DVN) as one potential suitor. Grubert has a Positive rating and $12 price target for the stock.
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