Shares of QEP Resources (NYSE:QEP) tumbled more than 18% by 12:30 p.m. EDT on Friday. Driving the downdraft in the oil driller's stock is a report that a potential buyer for the company has cut its offer price.
In January, hedge fund Elliott Management offered to take QEP Resources private in a $2 billion deal. The fund would pay $8.75 per share for each one of QEP Resources' shares that it didn't already own. The two parties were in advanced talks last month, according to a report by Bloomberg. That's after the hedge fund emerged as the winner over other bidders, which included a private equity fund and rival drillers such as Callon Petroleum (NYSE:CPE).
That deal, however, might now be in jeopardy. That's after a report by the New York Post said that the hedge fund had cut its buyout offer price. The Post sees the deal falling apart, since QEP Resources likely won't accept a lower bid. Meanwhile, it didn't seem likely that another buyer would emerge with an acceptable offer. Callon Petroleum, for example, is likely out of the running after recently agreeing to acquire Carrizo Oil & Gas.
Optimism that QEP Resources was close to accepting a buyout deal had begun to grow after it entered advanced talks with a hedge fund suitor. However, with the price the potential buyer is willing to pay now lower, it seems as if the deal might fall apart. If that happens, shares of QEP Resources could have farther to fall.