SAN FRANCISCO (MarketWatch) -- The U.S. subsidiary of Australia's largest public oil and gas company launched an $883 million hostile offer for New Orleans-based Energy Partners, Ltd. Monday, potentially unmooring Energy Partners' planned merger with Stone Energy Corp.
ATS, Inc., the Covington, La.-based unit of Australia's Woodside Petroleum (AU:WPL: news, chart, profile) , plans to offer $23 a share in cash for outstanding Energy Partners shares, Woodside said, and assume $257 million in company debt.
The offer, which Woodside said could be bumped up to as much as $24 a share, represents a 25% premium to Energy Partners' Friday closing price. ATS has already built up a 4.5% stake in Energy Partners totaling nearly 1.72 million of Energy Partners' 38.4 million outstanding shares.
The deal would expand ATS' reach into Gulf of Mexico oil and gas operations. Last year it bought Houston-based Gryphon Exploration, which had interests in 118 Gulf leases. Energy Partners would bring it a stake in about 120 exploration licenses in the Gulf and average daily production of about 28,117 barrels of oil a day.
"Woodside already has considerable operations in Louisiana and this acquisition allows us to grow our presence in the New Orleans area," said Woodside CEO Don Voelte in a statement.
The merger would require Energy Partners to break off a deal it made in June to buy Stone Energy, a Lafayette, La.-based independent oil and gas company, for $2.2 billion.
Energy Partners said it has advised stockholders "to take no action at this time" but said its board would meet to discuss the proposal.
said it was evaluating the announcement from ATC and that it "intends to move forward on the proposed combination" with Energy Partners.
Energy Partners shares jumped $5.74, or 31%, to close at $24.14. Stone Energy fell $3.24, or 6.8%, to $44.35.
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