(Reuters) – Activist investor Fir Tree Partners on Monday opposed SandRidge Energy Inc’s $746-million deal to buy rival Bonanza Creek Energy Inc , saying an acquisition would drain all of the oil and gas producer’s cash.
“We believe this proposed acquisition represents a complete about face by (SandRidge’s) management on its post-bankruptcy strategy,” Fir Tree Partners, which owns about 8.3 percent of SandRidge, said in a statement.
SandRidge emerged from bankruptcy late last year, while Bonanza did so in April following a recovery in oil prices after a two-year slump.
As of Sept. 30, Oklahoma-based SandRidge’s cash and cash equivalents stood at $133.2 million.
Shares of SandRidge, which had fallen nearly 22 percent since the beginning of the year, dropped another 15 percent on Wednesday after the deal was announced.
Bonanza Creek’s shares closed at $32.07 on Wednesday, well below SandRidge’s offer price of $36 per share, suggesting investors were skeptical the deal would close.
Fir Tree also said SandRidge was paying an “unjustified premium” for Bonanza Creek.