Koch Industries to buy PetroLogistics for $2.1B


PetroLogistics (PDH) agrees to be acquired by Koch Industries subsidiary Flint Hills Resources for ~$2.1B.

Flint Hills will pay $14 in cash for each PDH unit, an 8.3% premium over yesterday's close, except for units owned by a few select investors to be acquired for $12 each.

PDH has propylene operations around the Houston Ship Channel, and has an annual production capacity of ~1.45B lbs.

PDH +10.2% premarket.

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Comments (14)
  • Patent News
    , contributor
    Comments (1474) | Send Message
     
    sounds like a bad deal for company getting offer....
    28 May 2014, 07:30 AM Reply Like
  • bama67@live.com
    , contributor
    Comments (5) | Send Message
     
    At $14, this will be a steal for Koch Ind. Why would the majority unit holders sell this jewel? PDH yields 10% + in a zero yield world. The value of PDH output has big upside in the future as supply is constrained and demand will be increasing according to the analyst that I read. The management running PDH is very competent as they have managed profits during a recent squeeze in supply of their feedstock (butane,etc.). Even without the synergies Koch can bring to this business, it is still a low risk high reward acquisition. We can only hope that a better offer comes down the road but the deal termination fees agreed by PDH ownership would sting in any event. In order to overcome that penalty, a better offer would need to be substantially higher than $14.

     

    Smoakie
    28 May 2014, 09:30 AM Reply Like
  • Douglas E. Johnston
    , contributor
    Comments (1773) | Send Message
     
    yup - the upside is truncated once again. Makes me wonder how stocks ever trade at a 15 multiple. Insiders wanted out. Even at $12, they made a huge buck from where they started. The IPO was just gravy. Should get a distribution or two so high 14s is ultimate take-out...
    28 May 2014, 11:10 AM Reply Like
  • dday0606
    , contributor
    Comments (14) | Send Message
     
    this makes me very sad
    28 May 2014, 10:53 AM Reply Like
  • Douglas E. Johnston
    , contributor
    Comments (1773) | Send Message
     
    welcome to the jungle...only buy when its dirt, i mean DIRT cheap especially when private equity is involved or their is a "mother" entity....
    28 May 2014, 11:12 AM Reply Like
  • Fernando Soriano
    , contributor
    Comments (953) | Send Message
     
    I agree with previous comments. This is not a good news for me either. Last numbers I did on PDH showed a share asset value of $15,37. $14 offer means Koch is buying with a discount of near 20%. Not bad for him, but very bad for unitholders!
    28 May 2014, 12:35 PM Reply Like
  • 11146471
    , contributor
    Comments (1354) | Send Message
     
    They took it very cheap! Bad for as individual investors.

     

    They should offer at least 22$ and they would still have bought this at a 6,7% DY!
    28 May 2014, 02:11 PM Reply Like
  • Douglas E. Johnston
    , contributor
    Comments (1773) | Send Message
     
    and to top it off, a few directors just got stock awards 2 weeks ago for all their hard work for shareholders!
    28 May 2014, 03:06 PM Reply Like
  • Douglas E. Johnston
    , contributor
    Comments (1773) | Send Message
     
    So they IPO'd at $17 and will have paid $3.5 in distributions by the time this settles. So the BOD either screwed over initial investors OR they are screwing over current investors
    29 May 2014, 03:26 PM Reply Like
  • Sam47Ag
    , contributor
    Comments (57) | Send Message
     
    The BOD is sticking it to every common unit holder who actually had to buy their units in an open market. The BOD members will of course do quit well, as will the GPs. Their is nothing wrong with them cashing out, but they could have done it without, as you so well put it, "screwing" the common unit holders.
    29 May 2014, 04:19 PM Reply Like
  • Sam47Ag
    , contributor
    Comments (57) | Send Message
     
    I think most common unit holders would agree this is not a good deal and that the board did not meet its fiduciary duty to obtain the best possible price for the shareholders.

     

    That being said, there are multiple securities litigation law firms that immediately announced investigations. I've communicated with one (Johnson & Weaver) who said they are likely to file a complaint. I will agree to be a class member once the suit is filed. It’s the only way I/we (the lowly common unit holders) can try and do something about this.

     

    I'm generally not a fan of class action securities litigation as much of it is baseless. But in this case, where the purchase premium doesn't even equal one year of yield, it’s warranted. The more common unit holders who sign on, the more likely the deal terms will be improved.
    29 May 2014, 03:33 PM Reply Like
  • 11146471
    , contributor
    Comments (1354) | Send Message
     
    Excellent!

     

    Take a look here: http://yhoo.it/1k5i7Ro

     

    We must demand at least 22$ per share. Otherwise is pure theft!
    29 May 2014, 04:49 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (820) | Send Message
     
    Charles Koch is playing hardball. Watch out.
    31 May 2014, 01:00 AM Reply Like
  • psychological-dividends
    , contributor
    Comments (820) | Send Message
     
    what's I've been reading is that Charles Koch is trying to position Koch industries like Berkshire Hathaway, a competitor to private equity for business sale.
    31 May 2014, 07:17 PM Reply Like
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