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Buckeye GP Holdings shareholders should reject owners' tender offer

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October 22, 2008 – Comments (0) | RELATED TICKERS: BGH.DL2

The privately held owners of most units of Buckeye GP Holdings (BGH) made a tender offer for $17 today with the intention of taking the entire company private. I believe they're trying to take advantage of market conditions and making a lowball offer. Buckeye GP Holdings yields 8.7% today and should be able to grow distributions over 10% annually going forward; the underlying assets are high quality and relatively low risk. The offer significantly understates BGH's potential. I don't know how much of a chance minority owners have to reject this buy-under, but I wouldn't be surprised if a lot of them do. I've ended my pick in CAPS but I would vote to reject management's offer if I owned the stock.

Meanwhile, I suggest interested investors look at Magellan (MGG) and Enterprise GP Holdings (EPE) for publicly traded GPs.

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