SandRidge Energy Inc.'s board adopted a stockholder rights plan aimed at discouraging a takeover and amended the oil and gas company's bylaws to require a majority shareholder vote to approve any changes in certain requirements, including provisions related to the composition of the board.
The plan's poison pill trigger kicks in at 10% for investors who signal in securities filings that they plan to take an active role in the company. For passive institutional investors, the limit is 15%. If that threshold is met, every other shareholder would have the opportunity to buy more shares at a steep discount, effectively diluting the stake of the major investor.
"Today's actions are designed to protect the interests of all of our stockholders," the company said in a written statement. "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."
Morningstar Analyst Mark Hanson said SandRidge's any investor attempting to take over would "in effect be severely diluted."
A group of investors could try to coordinate efforts, he said, but they would still have to contend with a law mandating staggered terms for corporate board members.
"There's not much shareholders can do," Mr. Hanson said. Longtime investors who bought SandRidge stock a few years ago when it was above $60 may be relieved not to be taken out at a fraction of that price. But shareholders who bought the stock closer to its current price, $5.62, will likely be "incensed" at a lost opportunity to be bought out for a few dollars more than they paid, he said.
The Oklahoma City energy producer has come under increasing pressure from certain shareholders to shake-up its board, replace Chief Executive Tom Ward and explore a possible sale of the company. This month two investment firms, TPG-Axon Capital and Mount Kellett Capital Management, sent public letters to that effect.
TPG-Axon, which announced last week that it has boosted its stake in SandRidge to 6.2% of the company, said SandRidge had an "incoherent, unpredictable, and volatile" strategy and habits that give the perception of "reckless spending" and "appalling" corporate governance.
TPG-Axon was not immediately available for comment.
Those demands, combined with mixed third-quarter results and an announcement from the company that it would seek to sell some of its most prolific oil fields, touched off a period of volatile trading in the stock. Shares closed up 5.24%, or 28 cents, at $5.62 on Monday. The stock has fallen nearly 33% this year and has lost more than three-quarters of its value since its 2007 IPO.
SandRidge shares were down 1.1% at $5.56 in recent after-hours trading.
Tess Stynes contributed to this article.
Copyright (c) 2012 Dow Jones & Company, Inc.
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