Settling for second

6 February 2018 By Lauren Silva Laughlin Follow @TheRealLSL

Oklahoma driller Midstates wants to merge with the activist’s current plaything, SandRidge Energy. It could create considerable value from cost savings, and oust SandRidge’s CEO. In an ideal world, Icahn might prefer a cash offer, or an auction – but this is a pretty good fallback.

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Midstates Petroleum on Feb. 6 proposed a merger with SandRidge Energy, the oil driller that has been targeted by activist investor Carl Icahn.

The merger would join two companies with a combined market capitalization of around $1 billion and operations in the Mississippi Lime Basin, an area that spans Oklahoma and Kansas. SandRidge’s shareholders would own approximately 60 percent of the combined company, but Midstates Chief Executive David Sambrooks would run it.

The combined company would save $70 million a year on operating costs and capital expenditure, Midstates estimates.

Midstates said that Sambrooks and SandRidge boss James Bennett had communicated about a potential tie-up but that “Mr. Bennett has not yet provided a date for a meeting.”

The proposal has support of Fir Tree Partners, SandRidge’s third largest shareholder and Midstates’ largest shareholder. Icahn, SandRidge’s largest shareholder, has not said whether he supports the proposal.

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