Rentech Nitrogen Partners, L.P.
Robbins Arroyo LLP: Acquisition of Rentech Nitrogen Partners, L.P. (RNF) by CVR Partners, LP (UAN) May Not Be in Unitholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Rentech Nitrogen Partners, L.P. (NYSE:RNF) by CVR Partners, LP (NYSE:UAN). On August 10, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which CVR will acquire Rentech. Under the terms of the agreement, Rentech unitholders will receive 1.04 units of CVR and $2.57 in cash for each unit of Rentech they own, the value of which is equivalent to $13.69 per unit of Rentech.
Is the Proposed Acquisition Best for Rentech and Its Unitholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Rentech is undertaking a fair process to obtain maximum value and adequately compensate its unitholders.
As an initial matter, the $13.69 merger consideration represents a premium of only 32.9% based on Rentech’s closing price on August 7, 2015. This premium is significantly below the average one-day premium of nearly 43.1% for comparable transactions within the past year. Further, the $13.69 merger consideration is significantly below the target price of $22.00 set by an analyst at Imperial Capital LLC on March 24, 2015. Additionally, four other analysts have set the target price for Rentech above the merger consideration at between $19.13 and $15.00. In the last three years, Rentech traded as high as $49.18 on February 1, 2013, and most recently traded above the merger consideration – at $13.98 – on July 20, 2015.
On May 11, 2015, Rentech reported strong earnings results for its first quarter 2015. Consolidated revenues for the first quarter 2015 were $105.6 million, up 28.3% compared to $82.3 million in the prior year period. Gross profit for the first quarter of 2015 was $24.3 million, up 35.7% compared to $17.9 million in the prior year period. Consolidated Adjusted EBITDA for the first quarter of 2015 was $17.6 million, an improvement of $11.6 million compared to the prior year period. In commenting on these results, Rentech President and Chief Executive Officer Keith Forman remarked, “Results for the first quarter were generally in line with our expectations for improved profits. At Rentech Nitrogen, margins improved in the first quarter from last year, due to robust demand for ammonia and ammonium sulfate, higher ammonium sulfate prices and lower natural gas prices.”
In light of these facts, Robbins Arroyo LLP is examining Rentech’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.
Rentech 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.
Rentech 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.