(Reuters) - Corvex Management LP on Wednesday disclosed that it raised its stake in oil and gas producer Energen Corp (EGN.N) to 7.6 percent and expressed “disappointment” with the company’s decision to stick to its business plan.
Corvex, a $5.5 billion hedge fund run by activist investor Keith Meister, had reported a 5.5 percent stake in Energen last month and called on it to explore a sale of the company. Energen said on June 19 that it launched a sales process and decided to stick with its business plan.
Corvex, in a follow-up letter disclosed in a securities filing on Wednesday, said Energen's strategic alternatives process was hastily done and conducted without a formal process to solicit shareholder views. (bit.ly/2tlmPV8)
Energen “announced a status quo business plan less than 3 weeks after we sent our letter to the company,” Meister wrote in the letter, dated June 27. “At best this represents a poorly run process and at worst it is misleading and emblematic of corporate entrenchment.”
Energen responded on Wednesday by saying that it conducted a review of its business with the help of two financial advisers and input from shareholders and concluded that its best option was to continue with its present business execution.
“Energen has recently spoken to many of the company’s top shareholders and met with them and others in one-on-one settings and at industry conferences,” the company said in a statement. “We continue to remain open to value creation opportunities.”
Corvex’s newly disclosed 7.6 percent stake makes it Energen’s fifth-largest shareholder, according to Thomson Reuters calculation.
Energen has a large concentration of assets in the Permian Basin, which has become a hotbed of merger and acquisition activity as a recovery in oil prices spurs energy firms to make strategic investments.
Birmingham, Alabama-based Energen’s shares were up 2.5 percent at $49.15, giving the company a market value of about $4.80 billion.
Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Shounak Dasgupta and Leslie Adler