SandRidge Energy Inc. directors Monday took steps to protect the company from a hostile takeover after two shareholders called for management changes.
Commonly known as a “poison pill,” SandRidge's new stockholder rights plan would dilute the voting power of large, active shareholders.
“Today's actions are designed to protect the interests of all our stockholders,” SandRidge said in a statement Monday. “The board and management look forward to continuing to engage in constructive dialogue with stockholders regarding our plans for the business and remain committed to improving performance and enhancing stockholder value.”
Under the terms of the plan, if an active investor controls 10 percent of the company or a passive institutional investor controls 15 percent, other shareholders would have the right to buy additional shares at a reduced price.
SandRidge spokesman Greg Dewey said the plan provides a significant penalty for activist investors.
“It's not an unusual move at all for companies in our position,” said Dewey, SandRidge's vice president of communications and community relations.
Analyst Mark Hanson said the poison pill language sends a clear message.
“It's not subtle, and it's clear they're doing everything they can to circle the wagons and make sure no one comes in and gets a big position,” said Hanson, an analyst with Morningstar Inc. in Chicago.
“I see why they did it, but poison pills generally are not viewed as a shareholder-friendly move.”
Monday's action comes after two investors over the past two weeks called for the ouster of CEO Tom Ward and changes to the company's board.
Mount Keller Capital Management LP — which holds a 4.5 percent stake in SandRidge — last week said the Oklahoma City energy company should be worth $20 a share, nearly four times its closing price Monday of $5.62 a share.
“SandRidge has not merely failed to even remotely maximize the potential of its assets, but it has destroyed stockholder value,” Mount Keller wrote in a letter last week to SandRidge's board.
That letter followed less than a week after TPG-Axon Capital called for a new CEO at SandRidge and for the directors to consider selling the company. TPG-Axon controlled 6.2 percent of SandRidge shares as of last week.
“Although we are enthusiastic about the value potential in SandRidge, we have grown increasingly concerned about the ability of this management team, or of the board of directors, to protect shareholder interest,” TPG-Axon CEO Dinakar Singh wrote in a letter to the SandRidge directors.
Besides the comments from the two active investors, passive investor Fairfax Financial Holdings on Friday told regulators it has increased its stake in SandRidge to 10.4 percent.
SandRidge shares gained 28 cents, or 5.2 percent, Monday to close at $5.62 on the New York Stock Exchange. In after-hours trading, the stock price slipped 13 cents, or $2.3 percent, to $5.49.
CONTRIBUTING: Jay F. Marks and Paul Monies,