GMT Capital, the second-largest shareholder in oil company Pipestone Energy, said on Friday it intends to vote against an all-stock deal proposed by larger rival Strathcona Resources as it undervalues the company.
Candian oil producer Strathcona said last month it will go public by acquiring Pipestone to create a combined business with a market capitalization of C$8.6 billion ($6.36 billion).
As per the all-stock deal, which is expected to close in October, Pipestone shareholders will receive 9.05% of the pro forma equity in the combined company, with existing Strathcona shareholders owning the rest.
Investment firm GMT Capital, which holds a 13.47% stake in Pipestone, according to LSEG data, said the buyout deal undervalues Pipestone Energy’s common shares.
The acquisition requires approval from two-thirds of Pipestone shareholder votes cast at a meeting in September.
Strathcona and Pipestone did not immediately respond to Reuters requests for comment.
As of last close, Pipestone’s shares have fallen 8% since the deal was first announced on Aug. 1. Stock is up 3.6% at C$2.61 in afternoon trading.
Strathcona earlier said the combined company will retain its name and be led by its CEO Rob Morgan.
(Reporting by Tanay Dhumal in Bengaluru)