Are the Buyout Sharks Starting to Circle Chesapeake Energy?
The buyout sharks are circling midstream behemoth Williams, as we reported yesterday (see Energy Transfer Makes “Indecent Proposal” to Buy Williams for $48B). For some time, there have been rumors that the upstream sector may also see more buyout activity. Specifically, Chesapeake Energy is a favorite name that keeps reappearing. Are the buyout sharks starting to circle Chesapeake? MDN spotted an open letter to corporate raider Carl Ichan on the Seeking Alpha website. Icahn is the second largest investor in Chesapeake. We think the letter illustrates what’s wrong with capitalism, if we might be so bold as to say so. The letter writer encourages Ichan to make a bid for Chessy since the company’s stock is priced half today what it was a year ago. The letter writer predicts a buyout bid by Ichan would create a bidding war and somebody else would buy the company for big bucks, enriching Ichan and other investors (and no doubt lead to more Chesapeake employees losing their jobs). What if Ichan himself wins the bidding war he starts? No sweat. Just wait 6-12 months, says the letter writer, and then break the company apart into pieces and sell it off piece by piece and make 3-4x your original investment. We think that’s a phenomenally poor idea…
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