EPL Oil & Gas, Inc.
Acquisition of EPL Oil & Gas, Inc. by Energy XXI May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of EPL Oil & Gas, Inc. (NYSE: EPL) by Energy XXI (NASDAQ: EXXI). On March 12, 2014, the companies announced the signing of a definitive agreement pursuant to which EPL shareholders will receive $39.00 per share in cash or 1.669 common shares of EXXI stock, or a combination of cash and stock for each share of EPL stock.
Is the Proposed Merger Best for EPL and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at EPL is undertaking a fair process to obtain maximum value and adequately compensate EPL shareholders.
As an initial matter, the $39.00 merger consideration represents a premium to shareholders of 33.09% based on EPL’s closing price on March 11, 2014. This one day premium is significantly below the median one day premium of over 52% for comparable transactions in the last three years. Further, prior to the announcement of the merger, there were six analysts with target prices higher than the $39.00 merger consideration, including an analyst at Clarkson Capital Markets who set a price of $44.00 on November 25, 2013. Moreover, EPL has traded above the offer price as recently as October 21, 2013, reaching a high of $42.64.
In addition, on February 27, 2014, EPL released its financial results for the fourth quarter and full year 2013, reporting strong increases in oil production, revenue, and net income. Specifically, EPL reported a 63% increase in annual oil production as well as a 64% increase in revenue. EPL also reported net income for 2013 of $85.3 million, or $2.15 per diluted share, compared to $58.5 million, or $1.50 per diluted share, for fiscal 2012. In announcing the company’s result, EPL’s Chairman, President, and Chief Executive Officer, Gary C. Hanna, stated, “2013 was a transformational year that delivered on all of our stated goals as we continued our focus on implementing our acquire and exploit strategy. With six acquisitions under our belt since 2011 including the recently closed Eugene Island 258/259 field, we are focused squarely on the future upside potential of our current asset base.”
Given these facts, Robbins Arroyo LLP is examining the EPL board of directors’ decision to sell the company to Energy XXI now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
EPL 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.
EPL 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.