Murphy may have a better idea of what their assets are worth than does Loeb, who claims that if the company divests certain assets it could raise as much as $8.9 billion. Bloomberg cites an analyst at UBS who thinks that the assets could fetch as little as $4.5 billion.
Loeb wants Murphy to spin-off its retail business and sell its U.K. refinery, its 5% stake in Syncrude’s oil sands projects, and its Canadian Natural Gas assets. In a letter to Third Point’s shareholders, Loeb said that if Murphy takes his advice the stock could be worth $91 to $94 a share a share, about 50% more than its current level.
Speaking of Murphy’s reluctance to part with the retail business Loeb’s letter says:
[I]t appears sentimental attachment by management and the Murphy family is driving a stubborn desire to hold onto these and other non-strategic assets, creating a significant drag on enterprise value.
Loeb may have a point. In the past two years, Murphy’s shares have lost about 4% of their value, while the S&P 500 has gained nearly 30%. The company simply isn’t big enough (market cap of about $11.4 billion) to play in the same league with the integrated supermajors like Exxon Mobil Corp. (NYSE: XOM) and Chevron Corp. (NYSE: CVX).
Murphy’s shares are trading up 0.9% today, at $57.26 in a 52-week range of $50.62 to $78.29.
Loeb’s letter is available here.
Paul Ausick
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