Robbins Arroyo LLP: Acquisition of SunCoke Energy Partners, L.P. (SXCP) by Acquiring SunCoke Energy, Inc. (SXC) May Not Be in Unitholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of SunCoke Energy Partners, L.P. (NYSE: SXCP) by SunCoke Energy, Inc. (NYSE: SXC). On October 31, 2016, the two companies announced the signing of a definitive merger agreement pursuant to which SunCoke Energy will acquire SunCoke Energy Partners. Under the terms of the agreement, SunCoke Energy Partners unitholders will receive 1.65 new shares of SunCoke Energy common stock, the value of which is equivalent to $17.80, for each unit of SunCoke Energy Partners common units.
Is the Proposed Acquisition Best for SunCoke Energy Partners and Its Unitholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at SunCoke Energy Partners is undertaking a fair process to obtain maximum value and adequately compensate its unitholders.
As an initial matter, the $17.80 merger consideration represents a premium of only 5.00% based on SunCoke Energy Partners’ closing price on October 28, 2016. This premium is significantly below the average one day premium of nearly 33.84% for comparable transactions within the past five years. Further, the $17.80 merger consideration is significantly below the target price of $20.00 set by an analyst at J.P. Morgan on October 20, 2016 and $19.00 set by an analyst at FBR Capital Markets on October 21, 2016. In the last three years, SunCoke Energy Partners traded as high as $32.02 on March 6, 2014, and most recently traded above the merger consideration – at $18.38 – on June 25, 2015.
On October 20, 2016, SunCoke Energy Partners reported earnings results for its third quarter 2016. Net income attributable to SunCoke Energy Partners increased $1.8 million, or 9.3%, to $21.3 million. In commenting on these results, SunCoke Energy Partners Chairman, President and Chief Executive Officer Fritz Henderson remarked, “We continue to perform in line with expectations and remain on track to deliver against our 2016 Adjusted EBITDA guidance of $207 million to $217 million underpinned by our strong cokemaking performance. We applaud the milestones our CMT [Convent Marine Terminal] customers reached with their lenders and are working side-by-side with them to maximize the value our terminal can bring to their operations. We are also quite pleased about the domestic thermal coal pilot we announced earlier this week and look forward to proving out our domestic-facing capability with the goal of securing additional merchant volumes.”
In light of these facts, Robbins Arroyo LLP is examining SunCoke Energy Partners’ 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.
SunCoke Energy Partners 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.
SunCoke Energy Partners 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.
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