GasLog Ltd is lowballing investors in its take-private offer for affiliate GasLog Partners, market observers said, but opinions remain split as to whether competitors could emerge.

In the wake of the nearly $400m offer disclosure on Wednesday, Stifel’s Ben Nolan argued it makes sense to roll New York-listed GasLog Partners into privately-held GasLog Ltd given the lack of popularity of the master limited partnership model.

The $7.70 per share offer — which includes a $2.30 per share special dividend — is too low, he said, but Peter Livanos-backed GasLog Ltd’s ownership of just over 30% of all GasLog Partners shares meant other bidders were unlikely.

“Ultimately, as has been the case with other similar deals, we expect the terms to improve to something north of $8/unit but less than $9/unit, which is our [net asset value] estimate,” Nolan said.

He said a more reasonable offer for GasLog Partners would work out to $9.40 per share, in line with recent years’ spate of LNG mergers and acquisitions deals, increased interest rates, an ageing fleet and updated multiples.

“Given that GasLog Ltd owns 30% of the partnership and is the general partner, we don’t see another bidder coming in to offer a higher price,” Nolan said.

“While there ultimately may be some upside to the takeout price, it is up to the parent to see if they are interested in taking the partnership out at a higher price in order to incentivise common unitholders to vote for the transaction.”

Value Investor’s Edge researcher and investor J Mintzmyer called the $7.70 per share offer brazen and had much higher net asset value estimates for GasLog Partners: $17 per share charter-free and around $12 on a charter-adjusted basis.

Mintzmyer is long GasLog Partners.

“The offer either needs to be significantly improved (anything below $10 is an absolute non-starter), or I expect we could also see some competing bids start to materialise,” he said.

He argued that takeovers are typically done at 20% to 30% premiums, higher than the 16.3% premium offered by GasLog Ltd, meaning a mid-$10s offer would be more realistic.

“The price is also ridiculous considering [GasLog Partners] traded in the mid-$8s thru most of November and into December,” Mintzmyer said.

“The recent low prices are arguably ‘artificial’ due to widespread European brokerage forced selling due to misunderstanding of new US [publicly-traded partnerships] taxation laws.”

On Thursday, GasLog Partners continued rallying, rising to $8.23, a $0.23 or 2.87%, by midday.

Shares opened Wednesday at $6.23 and quickly shot up above $7 and at periods traded over $8 following the offer’s disclosure.