NEW YORK, Oct 22 (Reuters) -

Martin Midstream Partners ( MMLP ) said on Tuesday it stood

behind its planned takeover by its largest shareholder, after

two hedge funds which made a competing bid said they planned to

try and rally shareholders to vote against the deal.

Martin Midstream ( MMLP ), which focuses on storing and

transporting fuels, earlier in October agreed to a

$157 million deal

with Martin Resource Management Corp. Under the deal, MRMC

will pay $4.02 per unit in cash for the common units it does not

already own, after initially offering in May to acquire Martin

Midstream ( MMLP ) for $3.05 per unit.

MRMC currently holds 15.7% of the common units of Martin

Midstream ( MMLP ).

Hedge funds Nut Tree Capital Management and Caspian

Capital, which in July offered to buy Martin Midstream ( MMLP ) for $4.50

per unit, said on Tuesday they continued to oppose the takeover

by MRMC. They argued that the MRMC offer undervalued Martin

Midstream ( MMLP ), and they also raised concerns about conflicts of

interest in the process which saw the MRMC offer accepted.

In response, Martin Midstream ( MMLP ) said in a statement it

reaffirmed its commitment to the MRMC deal, insisting it was

approved after a nine-month evaluation process which included

considering the hedge funds' buyout offer.

The two hedge funds hold exposure to Martin Midstream ( MMLP )

through cash-settled derivatives worth the equivalent of 13.2%

of the common units, and will file regulatory paperwork allowing

them to petition unitholders to reject the buyout, according to

their statement.

The hedge funds face an uphill battle to block the MRMC

deal because unitholders allied with MRMC representing 26% of

the common units have committed to vote in favor. The

transaction requires the approval of the holders of a majority

of the outstanding common units of Martin Midstream ( MMLP ).

Kilgore, Texas-based Martin Midstream ( MMLP ) also questioned

the hedge funds' alignment with unitholders as their exposure to

the company was currently described as through derivatives.

MRMC's winning bid represented a 34% premium to Martin

Midstream's ( MMLP ) closing share price on May 23, the day before the

bid was made public.

A date for the vote has not yet been disclosed.

MRMC is headed by Ruben S. Martin III, whose father in

1951 set up the business to which MRMC and Martin Midstream ( MMLP )

trace their roots.

Martin Midstream ( MMLP ) is structured as a tax-efficient master

limited partnership. In an MLP, the ownership is split into

publicly traded common units, and also general partner (GP)

units that have outsized influence because the owner of these

units controls the governance of the partnership. MRMC controls

the GP stake.