By David French

NEW YORK, Oct 22 (Reuters) - Hedge funds Nut Tree Capital Management and Caspian Capital are planning to oppose the takeover of Martin Midstream Partners by the company's largest shareholder, according to a joint statement from the funds.

The hedge funds, which made a competing bid to buy Martin Midstream for $4.50 per unit in July, have argued that Martin Resource Management Corporation's $157 million deal to buy Martin Midstream undervalues the fuels storage and transporter and raises concerns over conflicts of interest.

MRMC and Martin Midstream did not immediately respond to requests for comment.

Earlier in October, MRMC agreed to buy the common units of Martin Midstream it did not already own for $4.02 per unit in cash, after having initially offered to acquire the company for$3.05 per unit. The offer represented a 34% premium to Martin Midstream's closing share price on May 23, the day before MRMC's initial bid was made public.

Nut Tree Capital Management and Caspian Capital, which own 13.2% of Martin Midstream, are planning to vote against the MRMC deal and said they will file regulatory paperwork that will allow them to petition other shareholders to reject the buyout, according to the statement that was seen by Reuters on Tuesday.

It would, however, be challenging for the hedge funds to block the MRMC deal, because unitholders allied with MRMC that represent 26% of the common units are planning to vote for the deal. The transaction requires the approval of the holders of a majority of the outstanding common units of Martin Midstream.

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 trace their roots.

Martin Midstream 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.

(Reporting by David French in New York; Editing by Muralikumar Anantharaman)

((davidj.french@thomsonreuters.com;))