Eagle Rock Energy Partners LP
Robbins Arroyo LLP: Acquisition of Eagle Rock Energy Partners, L.P. (EROC) by Vanguard Natural Resources, LLC (VNR) May Not Be in Unitholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Eagle Rock Energy Partners, L.P. (NASDAQ: EROC) by Vanguard Natural Resources, LLC (NASDAQ: VNR). On May 21, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Vanguard will acquire Eagle Rock. Under the terms of the agreement, Eagle Rock unitholders will receive 0.185 units of Vanguard for each unit of Eagle Rock they own, the value of which is equivalent to $3.05 per unit of Eagle Rock.
Is the Proposed Acquisition Best for Eagle Rock and Its Unitholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Eagle Rock is undertaking a fair process to obtain maximum value and adequately compensate its unitholders.
As an initial matter, the $3.05 merger consideration represents a premium of only 21% based on Eagle Rock’s closing price on April 23, 2015. This premium is below the average one-month premium of nearly 22.3% for comparable transactions within the past three years. In the last three years, Eagle Rock traded as high as $10.58 on October 17, 2012, and most recently traded above the target price – at $3.10 – on November 28, 2014.
On April 29, 2015, Eagle Rock reported strong quarterly earnings results for its first quarter 2015. Total revenue was $52.1 million, an increase of 15.3% from the first quarter of 2014. In commenting on these results, Eagle Rock’s Partnership’s Chairman and Chief Executive Officer remarked, “Eagle Rock had a strong first quarter, especially given the tumultuous commodity price environment. We increased our daily production by 6% over fourth quarter 2014 volumes, and we are realizing meaningful reductions to our operating and capital costs while at the same time reducing our leverage to 1.8x LTM EBITDA. We have maintained significant liquidity and protected the distribution with our strong hedge portfolio.”
In light of these facts, Robbins Arroyo LLP is examining Eagle Rock’s board of directors’ decision to sell the company now rather than allow unitholders to continue to participate in the company’s continued success and future growth prospects.
Eagle Rock unitholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for unitholders and the disclosure of material information.
Eagle Rock unitholders 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.