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Athlon Energy Inc (NYSE:ATHL) Investor Files Lawsuit In Effort to Halt Takeover By Encana Corporation

  • If you purchased shares of Athlon Energy Inc (NYSE:ATHL) and currently hold any of those NYSE:ATHL shares, you have certain options and you should contact the Shareholders Foundation, Inc.

  • To have your information reviewed for options and to receive notifications about this case, please send an email to mail@shareholdersfoundation.com, or call us at (858) 779-1554.

Lawsuit Overview

Company
Athlon Energy Inc
Security
NYSE: ATHL

Case Name
Athlon Energy Deal Case 10/06/2014
Type of Lawsuit
Mergers and Acquisition
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Summary

October 07, 2014 (Shareholders Foundation) - An investor, who currently holds shares of Athlon Energy Inc (NYSE:ATHL), filed a lawsuit in effort to halt the proposed takeover of Athlon Energy Inc. by Encana Corporation for $58.60 per share.
The plaintiff alleges that the defendants breached their fiduciary duties owed to NYSE:ATHL stockholders by agreeing to sell Athlon Energy Inc too cheaply via an unfair process to Encana Corporation.

On September 29, 2014, Encana Corporation (TSX: ECA) (NYSE: ECA) and Athlon Energy Inc (NYSE:ATHL) announced that the two companies have entered into a merger agreement for Encana Corporation to acquire all of the issued and outstanding shares of common stock of Texas-based Athlon Energy Inc (NYSE:ATHL) by means of an all-cash tender offer for US$5.93 billion or US$58.50 per share, as well as Encana Corporation assuming Athlon's US$1.15 billion of senior notes, for a total transaction value of approximately US$7.1 billion.

However, the plaintiff claims that the offer is too low and undervalues Athlon Energy Inc. Indeed, the offered price is well below the target price set by at least eight analysts, including a price of $66.00 set by an analyst at Global Hunter Securities on July 22, 2014, a price of $65.00 set by an analyst at Stephens Inc. on August 15, 2014, and another analyst’s estimate of $64.00 per share. In addition, Athlon Energy Inc reported that its annual Total Revenue rose from $157.11 million in 2011 to $299.37 million in 2013 and that its respective Net Income increased from $53.01 million to $59.06 million. Shares of Athlon Energy Inc (NYSE:ATHL) grew from $26.38 per share in August 2013 to as high as $50.89 per share in July 2014.

In addition, the plaintiff claims that the acquisition process is also unfair to ATHL stockholders. The plaintiff says that the proposed merger agreement contains certain preclusive deal protection devices, such as a no solicitation, a matching rights, and a hefty termination fee provision, that are designed to ensure the sale of Athlon Energy on terms preferential to Encana Corporation and preclude other bidders from making a higher offer.

On October 7, 2014, NYSE:ATHL shares closed at $58.22 per share.