Acquisition of PetroLogistics LP by Flint Hills Resources, LLC May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of PetroLogistics LLP (NYSE: PDH) by Flint Hills Resources, LLC (a subsidiary of Koch Industries, Inc.). On May 28, 2014, PetroLogistics announced that it and its general partner, PetroLogistics GP LLC, have entered into a definitive merger agreement to be acquired by Flint Hills Resources. Pursuant to the agreement, Flint Hills Resources will acquire all of PetroLogistics’ outstanding common units for $14.00 per common unit in cash, except for those common units owned by Lindsay Goldberg LLC, York Capital Management, PetroLogistics’ Executive Chairman and its President and Chief Executive Officer, which will be acquired for $12.00 per common unit in cash. Of note, Lindsay Goldberg, York Capital Management, PetroLogistics’ Executive Chairman and its President and Chief Executive Officer, own common units representing, in the aggregate, approximately 73% of the outstanding common units, and have delivered a written consent approving the transaction and have entered into support agreements with Flint Hills Resources pursuant to which they have agreed to support the transaction until it is consummated or until the Merger Agreement is terminated.
Is the Proposed Acquisition Best for PetroLogistics and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at PetroLogistics is undertaking a fair process to obtain maximum value and adequately compensate PetroLogistics shareholders.
As an initial matter, the $14.00 merger consideration represents a premium of just 8% based on PetroLogistics’ closing price on May 27, 2014. This premium is significantly below the average one-day premium of over 19% for comparable transactions in the past five years, not to mention the average one-month premium of over 28% for comparable transactions in the same five year period. Further, PetroLogistics traded over the merger consideration as recently as April 29, 2014.
PetroLogistics’ first quarter 2014 results were positive. The company not only increased its production by 5% over the same quarter last year, it also increased its total sales by 5%, or $11.3 million. Further, during January and February of this year, PetroLogistics set an average daily production record of 3.94 million pounds of propylene per day.
Given these facts, Robbins Arroyo LLP is examining PetroLogistics’ board of directors’ decision to sell the company to Flint Hills Resources. PetroLogistics 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.
PetroLogistics 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.