Sempra Energy (NYSE: SRE)
Shares of Sempra Energy rallied sharply in the morning trading session on Monday after Bluescape Resources and Elliott Management urged the company to conduct a strategic review of its business.
The two hedge funds also recommended six new directors to the company’s board sending the shares up $15.15, or 14.93% to $116.67 at 11:55 A.M. The two investors own a stake of 4.9% in Sempra Energy worth around $1.3 billion.
In a joint letter to Sempra Energy, the investors said that the company has become “a conglomerate structure consisting of disparate businesses grouped together with no compelling strategic or financial rationale” as a result of putting much focus on size.
Both said Sempra could be worth $11 billion-$16 billion, or $139-$158 per share if it restructures its core business operations.
Last year, Elliot backed Sempra in the purchase of Texas power transmission company Oncor, in a deal worth $9.45 billion.
“Our goal is to enter into a constructive dialogue with Sempra’s Board and management to discuss our ideas for sustainable value creation and reach a mutually established path forward. There is strong recent precedent for collaborating with Elliott and Bluescape in the utility industry to maximize value. We think an agreement can be reached quickly to enhance the Board and establish the Strategic Review Committee with the proper oversight, resources and mandate necessary for much-needed, fully objective portfolio and operational reviews. We believe this review can be completed and a Sustainable Sempra Plan announced to all key stakeholders by year-end,” said the letter sent to Sempra by the two hedge funds.
Sempra Energy Company Profile
Sempra Energy develops, operates and invests in energy infrastructure together with its subsidiaries. The company also provides gas and electric services in the US and internationally.
Its San Diego Gas & Electric Company utility generates, transmits, and distributes electricity. This utility also transports, distributes, and sells natural gas.
The company’s Southern California Gas Company utility operates and owns a natural gas transmission, storage and distribution system. Its Sempra South American Utilities subsidiary owns, operates, and develops electric generation, transmission, and distribution facilities.
Its Sempra Mexico utility owns, operates and develops ethane and liquid petroleum gas systems; natural gas transmission and distribution infrastructure; electric generation facilities; and liquefied natural gas storage terminals as well as regasification terminals.
It Sempra Renewables division owns, operates, and develops solar and wind power generation infrastructure.
The company’s Sempra LNG & Midstream division owns, operates, and develops liquefied natural gas as well as natural gas midstream operations and assets in Mississippi, Louisiana, Texas, and Alabama.
Sempra Energy primarily targets industrial, commercial and residential customers.
The competitors of company include ExxonMobil, Chevron, BP, Total, MidAmerican Energy, Petronas, Southern Company Gas, Royal Dutch Shell, Plains All American Pipeline, Carso Energy, NRG Energy, among others.
The company was founded in 1998 and its headquarters are based in San Diego, CA. –Reuters