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Sandell Wants Spectra to Exchange DCP for Phillips Stake

Activist investor Sandell Asset Management Corp. urged Spectra Energy Corp. to consider swapping its half of DCP Midstream LLC for units of a pipeline partnership controlled by Phillips 66, arguing it would raise shareholder value.

The proposal involving Phillips 66 Partners LP was included in a letter made public today to the board of directors at DCP, a joint venture between Spectra and Phillips, both based in Houston. Sandell said in a statement it’s a “significant shareholder” of both companies.

The transaction would be similar to last week’s deal by Devon Energy Corp. and Crosstex Energy Inc. to combine assets in a new midstream company, Shreyas Gupta, a managing director at Sandell, said today in a phone interview.

“We suggested this to Spectra a month ago and we want to get it out now,” Gupta said.

Spectra Energy won’t comment on the Sandell proposals, Phil West, a company spokesman, wrote in an e-mail, citing company policy. “Phillips 66 and Spectra are aligned to maximize the value of the joint venture for the benefit of their shareholders,” he said.

In the letter dated Oct. 2, Chief Executive Officer Thomas Sandell also reiterated a call for Spectra to sell or spin off Westcoast Energy, owner of Western Canadian pipelines. Spectra rejected that request in August.

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