Petrohawk Expected No Rival To BHP Billiton's $12.1 Billion Bid
August 11 2011 - 11:36PM
Dow Jones News
Petrohawk Energy Corp. (HK) made clear this week it believed it
was unlikely to attract a rival offer when it agreed to BHP
Billiton Ltd.'s (BHP) US$12.1 billion takeover bid, and it wasn't
likely to extract a higher price from its buyer.
Class action lawsuits have been launched by certain Petrohawk
stockholders who allege, among other things, that Petrohawk's board
breached its fiduciary duties by approving the offer and BHP aided
and abetted the purported breaches.
BHP has previously said the stockholders are seeking an
injunction prohibiting the transaction, or costs and damages if the
deal goes ahead.
Petrohawk had looked at various business opportunities before it
entered negotiations with BHP, including potential asset buys,
joint ventures and other strategic alliances. In late 2010, the
shale-gas developer entered a confidentiality agreement with an
unnamed company and held extended discussions about several
possible transactions, including the sale of the company, Petrohawk
said in an amended filing Wednesday to the U.S. Securities and
Exchange Commission.
The Houston-based company said its chief executive, Floyd
Wilson, was contacted in May by Barclays Capital to arrange a
meeting with representatives from BHP. The meeting took place in
early June, before exclusive negotiations began.
Petrohawk in its filing said its board met June 16 to discuss a
non-binding offer from the Melbourne-based mining giant, during
which senior management and representatives of advisor Goldman
Sachs suggested the prospect of a competing proposal was unlikely,
based on the relatively few potential companies able to acquire a
company like Petrohawk at a significant premium to its current
market price.
It said the board concluded it was in the best interest of the
company and its stockholders to enter exclusive negotiations with
BHP in light of, among other things, "the attractive offer price
[and] the risk of losing such offer if the company sought out
competing bidders at this time or insisted on a further increase in
BHP Billiton's revised proposal of US$38.75 per share."
Petrohawk on July 14 said its board was recommending BHP's
all-cash bid, which was priced at a 65% premium to Petrohawk's
earlier closing price.
-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094;
robb.stewart@dowjones.com
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