Spectra Energy Corp.'s (SE) plans to drop down its remaining
U.S. transmission and storage assets to Spectra Energy Partners
(SEP), while receiving praise from shareholder Sandell Asset
Management, don't go far enough, according to the activist
investor.
In a letter to Spectra Chief Executive Greg Ebel, Sandell CEO
Thomas Sandell said it has formed a group of shareholders, making
it one of Spectra Energy's largest holders.
The activist investor urged Spectra Energy to review strategic
options for its Canadian operations, including a possible initial
public offering, as well as its stake in DCP Midstream Partners LP
(DPM), including a possible dropdown or sale. The letter also urged
broad cost cuts across Spectra's businesses. Phillips 66 (PSX) is
DCP Midstream's other 50% owner, according to Sandell.
Sandell also said if the company doesn't follow its
recommendations, it plans to seek seats on Spectra's board.
A Spectra spokesman wasn't immediately available to comment.
Sandell reiterated that it thinks Spectra has an intrinsic value
of $48 a share, a 40% premium to the stock's Friday closing price
of $34.34.
Spectra Energy shares were up 32 cents at $34.66 in recent
trading, while Spectra Energy Partners' common units were up 2.6%
at $42.87.
Write to Tess Stynes at Tess.Stynes@dowjones.com
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