An investor in Petrohawk Energy Corporation (NYSE: HK) filed a lawsuit in State Court against Petrohawk Energy directors in effort to block the proposed acquisition of Petrohawk Energy Corp by BHP Billiton.
According to the complaint the plaintiff alleges that the defendants breached their fiduciary duty to NYSE:HK stockholders arising out of their attempt to sell Petrohawk Energy Corp too cheaply via an unfair process to BHP Billiton.

On Thursday, July 14, 2011, Petrohawk Energy Corporation [NYSE: HK] and BHP Billiton [ASX: BHP, NYSE: BHP, LSE: BLT, JSE: BIL] announced that the companies have entered into an agreement for BHP Billiton to acquire Petrohawk Corp. for US$38.75 per share by means of an all-cash tender offer for all of the issued and outstanding shares of Petrohawk, representing a total equity value of approximately US$12.1 billion and a total enterprise value of approximately US$15.1 billion, including the assumption of net debt.

Following the takeover proposal announcement shares of Petrohawk Energy Corporation (Public, NYSE:HK) rose from $23.49 per share on Thursday in after hours to $38.39 per share and traded on Friday at about $38.25 per share.

However, the plaintiff claims the $38.75-offer undervalues the company and the deal creates conflict of interest on the part of directors that “colors their ability to make an unbiased decision” as “ the acceptance of BHP’s offer demonstrates the company’s all-too-eager-to-sell mentality”.

In fact, NYSE HK shares traded during 2008 as high as $47.90 per share and at least one analyst has set a high target price for NYSE HK shares at $39 per share. Additionally Petrohawk Energy Corporation has performed well for its investors in the past. Petrohawk Energy’s 12months Total Revenue increased from $883.40million in 2007 to $1,597.86million in 2010. Its Net Income rose from a Net Loss of $1,025.45million in 2009 to a Net Income of $188.67million in 2010.

Furthermore the plaintiff alleges that the process is unfair to public shareholders of Petrohawk Energy Corporation since there is a “substantial conflict of interest” which “casts doubt on the board’s ability to make an unbiased decision regarding the benefits of the proposed transaction to Petrohawk’s shareholders”. Petrohawk Energy’s Chief Executive Officer, so the plaintiff, will make about $152 million from the deal on his roughly 3 million shares, will likely be eligible for a $10.4 million change-of-control payment, and stock options could add $24.85 million.

Additionally the plaintiff claims the agreement includes onerous and preclusive protection devices such as a $395 million termination fee if Petrohawk Energy Corp.decides to pursue a competing offer.