Activist says Spectra Energy should consider spinoff of 2 units

Mon Jun 17, 2013 3:35pm EDT
 
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NEW YORK, June 17 (Reuters) - An activist investor said that U.S. pipeline company Spectra Energy should evaluate strategic options for two of its subsidiaries or it will look to seat its own directors on the energy company's board.

Hedge fund Sandell Asset Management sent Spectra a letter calling for the moves days after the pipeline company announced a long-awaited plan to move all of its remaining U.S. transmission and storage assets into a partnership it controls.

Investors reacted positively to Spectra's plan to move the assets into its master limited partnership (MLP) Spectra Energy Partners as the company's shares jumped more than 10 percent after that announcement.

But Sandell said that the shifting of assets to the MLP is not enough. It said Spectra should consider an IPO for its Canadian operations and explore the sale, or IPO, of its joint venture with Phillips 66, DCP Midstream LLC.

Sandell said it believes that those changes - paired with cost cuts - could push Spectra's share price above $48 a share. The shares were up 4 cents at $34.39 on Monday afternoon.

Spectra Energy said in a response to Sandell's letter that the size, scale and strong balance sheet that are a result of its current structure are "significant drivers supporting Spectra Energy's successful execution of the more than $25 billion in natural gas expansion opportunities and also the significant incremental crude oil growth opportunities ahead."