Athlon Energy Inc.
Robbins Arroyo LLP: Acquisition of Athlon Energy Inc. (ATHL) by Encana Corporation (ECA) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Athlon Energy Inc. (NYSE: ATHL) by Encana Corporation (TSX: ECA). On September 29, 2014, Encana announced that the two companies signed a definitive merger agreement pursuant to which Encana will acquire all outstanding shares of Athlon for $58.50 per share in cash.
Is the Proposed Acquisition Best for Athlon and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Athlon is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $58.50 consideration represents a premium of 25.2% based on Athlon’s closing price on September 25, 2014, the last day of trading before the announcement. This premium is significantly below the average one-day premium of 40% for comparable transactions in the past three years. Further, the $58.50 consideration is substantially below the target price set by at least eight analysts, including a price of $66.00 set by an analyst at Global Hunter Securities on July 22, 2014, and a price of $65.00 set by an analyst at Stephens Inc. on August 15, 2014.
On August 12, 2014, Athlon released its second quarter 2014 financial results, reporting record results. In particular, the company reported a 95% increase in adjusted EBITDA of $97.1 million compared to $49.8 million for the same period in 2013. In addition, Athlon reported a 109% increase in total revenue of $136.5 million, compared to $65.2 million in the second quarter of 2013. Athlon also announced that the company’s average daily production volumes increased 96% to a record high of 21,901 BOE/D, compared to 11,183 BOE/D produced in the same quarter 2013.
In commenting on these results, Bob Reeves, Athlon’s Chairman, President and CEO, noted, “It’s nice to see that our outstanding individual horizontal and vertical well results are directly translating to predictable growth in production and cash flows. The first six horizontal wells are outperforming their average type curves by nearly 70%. As we continue to seamlessly integrate our acquisitions into the Company and add additional horizontal rigs through 2015, we expect these top-tier results to continue for many periods to come[.]”
In light of these facts, Robbins Arroyo LLP is examining Athlon’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Athlon shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Athlon shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.