More M&A: Seacor Holdings and QEP Resources the latest targets

It’s been a while since we last wrote and let’s just say that 2020 has been a rough year. On that note, we sincerely hope our readers are all safe and healthy.

Back to business and it’s time to play catch up again…

Despite a slowdown during the depths of the crisis, M&A activity picked up as 2020 progressed. That includes some former spinoff names and in this piece we will focus on Seacor Holdings and QEP Resources.


Seacor Holdings announced earlier this month that it is being taken private by private equity firm American Industrial Partners (AIP). The transaction is all cash and values the US transportation and logistics company at approximately $1B including net debt. A tender offer was launched at a price of $41.50 per share – a slight 14% premium to its prior close – and the deal is expected to close in Q1 2021. Shares currently trade at a slight discount to the tender offer so this looks good to go. As part of the transaction, CEO & Executive Chairman Charles Fabrikant will step down and be replaced by his son Eric, the current COO. AIP is keeping it in the family.

Seacor has completed a number of spinoffs over the years, but that doesn’t mean it has delivered value to its shareholders. The first spinoff we covered was its helicopter unit, Era Group, in 2013. Unfortunately, Era struggled – along with the overall industry – and ended up merging earlier this year with competitor Bristow Group (VTOL). Results weren’t great but it’s a cool ticker! The company then spun off Seacor Marine (SMHI), its offshore vessel unit, in 2017. Once again, independent life hasn’t been kind to shareholders and SMHI is down significantly since the transaction.

At the time of the ERA spinoff, we noted that the company had previously been a tremendous compounder of book value:

SEACOR is a gem of a company that we were surprised to encounter. Though its market cap is still under $2 billion, the company’s performance through last year met or exceeded Berkshire Hathaway’s (BRKB) over 5, 10 and 19 year periods, as we learned from an excellent writeup at The Brooklyn Investor.

I haven’t kept track of the company over the years, but a $1B takeover, including net debt, seven years later doesn’t feel like a success. Of course, pandemics and industry and market forces have quite a bit of say over that as well, no matter how well run a company may be.


2020 also hasn’t been kind to the oil patch, particularly the shale players. Amidst low oil prices and a country-wide focus on renewables, this once darling industry and source of US energy independence is now a bargain bin. Those with potentially good assets are being picked off and the latest example is Diamondback Energy’s (FANG) proposed purchase of 2010 spinoff QEP Resources. The proposal is all stock and values QEP at ~$2.2B including debt…essentially no premium at the time of announcement. Rough. QEP stockholders will receive 0.05 shares of FANG for every QEP share owned and are expected to own a little more than 7% of the combined entity. Diamondback is focused on the Midland in the Permian basin and as a result might look to sell QEP’s Bakken holdings.

Questar Corporation, QEP’s parent, was acquired by Dominion Resources (D) in 2016…which then sold off its transmission and storage business (including Questar’s pipelines) to Berkshire Hathaway (BRKB) earlier this year. In less than one decade both parent and spinoff were acquired.

Disclosure: Author is long shares of BRKB.


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