Boston, MA, 03/13/2014 – EPL Oil & Gas Inc (NYSE:EPL) is to be acquired by closest rival Energy XXI in a $1.53 billion deal which means at $39 per share, a premium of 43% to EPL’s Tuesday close. The announcement was made on Wednesday.
Mutual Benefits: CEO Energy XXI
The merger would create the largest publicly held independent oil producer on the Gulf of Mexico. It would give more freedom to Energy XXI and allow it to participate more vigorously in the domestic energy renaissance underway in North America. Energy XXI’s Chief Executive Officer, John Schiller, in an interview with CNBC, said that this would be the company’s greatest acquisition in terms of benefits for shareholders.
Schiller said that EPL Oil & Gas Inc (NYSE:EPL) houses expertise in areas in which his company lacks behind. He seeks to leverage this expertise against the company’s current assets. On the other hand, he said, the deal will also benefit EPL as they can take advantage of Energy XXI’s expertise on the production and technology areas. On the whole, the deal will prove valuable to investors.
Investigation Of EPL
Soon after the announcement, it was informed that Law office of Brodsky & Smith LLC and Harwood Feffer LLP are probing potential claims against the board of directors of EPL Oil & Gas Inc (NYSE:EPL) regarding the acquisition. As per the terms of the deal, EPL shareholders will be liable to receive $39 in cash or $1.669 shares of Energy common stock, or coalesce of both- cash and Energy stock per share of EPL stock they own. The probe concerns possible breaches of fiduciary duty and other important valuations of state law by the Board of Directors of EPL for not justifying the best interests of the Shareholders in the merger process. It also concerns whether the Board is maximizing the value of the company, sharing all material benefits and expenses and fulfilling its fiduciary duties.
The deal may undervalue EPL Oil & Gas Inc (NYSE:EPL) as an analyst has forecasted $44 per share price target on the company’s stock. In addition, the stock has traded at $42.27 recently, as on Oct 18, 2013.