Plains Exploration investor against deal with Pogo

By Lisa Kerner

Charlotte, N.C., Sept. 7 - Plains Exploration and Production Co. investor Fir Tree Value Master Fund, LP plans to vote against the proposed merger of the company with Pogo Producing Co.

Fir Tree cited in particular turmoil in the capital markets and management's plan to form a master limited partnership as reasons to vote against the deal.

Fir Tree, with a 9% stake in Plains Exploration, said its decision is also based on "detailed financial analysis which suggests that a termination of the transaction could result in Plains Exploration's share price appreciating by 70% or more over the ensuing year."

The investor made its views known in a letter to Plains Exploration's board of directors. The letter was included as part of a schedule 13D filing with the Securities and Exchange Commission.

Fir Tree believes that "large scale share repurchases are a much more efficient use of shareholder capital given the extreme decline" in the company's share price after the Pogo deal was announced. The shareholder also praised the management team's "tremendous job of creating value for shareholders over the past five years."

On July 17, it was announced that Plains Exploration agreed to acquire Pogo in a stock and cash transaction worth an estimated $3.6 billion and slated to close in the fourth quarter.

As previously reported, the companies' definitive agreement gives Pogo stockholders 0.68201 of a share of Plains Exploration common stock and $24.88 in cash for each share of Pogo common stock, or consideration of approximately $60 per share. Total consideration for outstanding Pogo shares is 40 million Plains Exploration shares and some $1.5 billion in cash.

Both companies' boards of directors approved the agreement and are recommending the transaction to their respective stockholders for approval.

Plains Exploration is a Houston independent oil and gas company.

Pogo, also based in Houston, is a natural gas production and exploration company.

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