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Alert: Brigham Exploration Acquired – Bittersweet for some investors
Posted by bakkenAs you have probably seen in the news today, Brigham Exploration (BEXP: 0.00 N/A) was acquired today. Statoil ASA announced the acquisition of Brigham Exploration Co. in a deal that will strengthen the Norwegian O&G’s foothold in the Bakken. The Norwegian company will buy Brigham for $36.50 a share in an all-cash tender offer, a 36% premium over the average trading price for the last 30 days. The total equity value of the deal is approximately $4.4 billion, with an enterprise value of about $4.7 billion. It will be interesting to see if Bud Brigham, CEO of Brigham Exploration stays on in the new venture long term. For long time Bakken investors, this acquisition is bittersweet. Many investors knew BEXP was a solid pure-play and could have seen greater levels in the next few years as it continued to execute on its growth strategies.
We have been bullish on BEXP for a while now, and have mentioned it as a candidate for acquisition a few times. In our interviews with Bud Brigham in the past, he always left the door open for an acquisition if it was the right time and in the best interest of the shareholders and it looks like that time has come.
We’ll start digging for the next acquisition target now but this one will be tough to beat.
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Tags: BEXP STA StatOil
The Tripp Levy law firm in NY is invloved as to why BEXP wasn’t sold at a fair price of $45 share.
American oil cos. will probably offer a sweeter deal. The longer term value of BEXP is enormous.
Although the announcement was made today, the tender offer will be filed with the SEC in about 10 days. It then will require stockholders to tender enough shares to consummate the deal. Normal odds are in favor of a tender offer being substantially subscribed.
On the one hand I was appreciative of the jump in price on announcement of the tender offer. You see, I was sitting on north of 100 October $33 contracts that were worth 1.5 cents a share on Friday and were worth $3.50 this morning. I didn’t waste time taking that money to the bank. On the other hand I believe a realistic near term value on Brigham should be in the $50 to $60 range.
Nealy all of the analysts have targets on BEXP well above the tender price.
I have been in contact with at least a half dozen class action attorneys who are jumping into this one. I talked to them as well when American Oil and Gas was given a way at a bargain price and nothing came of that. There is however a major difference as it was prudent for American because they didn’t have the critical mass to demand rigs, transportation and other services in a timely manner and operationally a sale to Hess became prudent with these services all in high demand.
If you followed the stock price today, it hovered around $36.38 most of the day…. $36.50 less time value of money until settlement. Then late, the stock took off and actually closed at $36.75 and an Ask of $37.00… above $36.50 tender price. There are obviously other investors who believe the tender is both to low and is merely a starting point.
I will be surprised if Brigham’s acreage and command of the technology goes unnoticed by other companies, some of whom may have already been scoping acquisition plans for BEXP. I hate to see Bud cash in his chips, but I smell and hope for a bidding war if it must happen.
I’m contemplating being a buyer of November or January $38 calls in the morning. If it runs it won’t be for pennies and November 38′s are at 15 cents ask. $10,000 would buy 650 contracts and a run to $40 would take $120,000 to the bank! A run to $50 would bank $???,???. I need to sleep on this.
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