Oil States International Inc., a provider of housing at oilfields, rose to the highest in its history after activist investor Jana Partners LLC disclosed a stake and said it’s talked with management about strategic changes.
Shares increased 17 percent to $89.36 at the close in New York, the highest since the Houston-based company began trading in 2001.
Jana acquired a 9.1 percent stake in Oil States and spoke with management about separating the company’s well-site services unit and creating a real estate investment trust for the oilfield housing business, the investment fund led by Barry Rosenstein said yesterday in a federal filing. The New York-based hedge fund also prompted Marathon Oil Corp. and McGraw-Hill Cos. to consider spinoffs and has campaigned for changes at Agrium Inc.
“It has always been the plan of Oil States management to turn the accomodations business into some type of yield, return-of-capital vehicle,” James Wicklund, an analyst at Credit Suisse Group AG in Dallas, who rates the shares a hold and owns none, said today in a telephone interview. “That’s a fairly large stake for an activist to take, and their point is, Let’s do it now or investigate doing it now.”
Oil States provides housing for workers in the Canadian oil-sands projects, Australian mining regions and in some parts of the U.S.
The accomodations unit is expected to provide 53 percent of the company’s earnings before interest, taxes, depreciation and amortization this year, Wicklund said. It had sales of $297 million in the first quarter, Oil States said last week in an earnings statement.
The accomodations unit may be valued as much as $5.5 billion under a REIT structure, Stephen Gengaro, an analyst at Sterne Agee & Leach Inc. in New York, wrote yesterday in a note to investors.
Oil States’ Chief Financial Officer Bradley Dodson said on an April 26 call that the company has considered and so far rejected strategic options for its accomodations unit.
Patricia Gil, a spokeswoman for Oil States, didn’t return a call seeking comment.