WildHorse, Chesapeake Energy $3.98B Merger Draws Investor Suit

Jan. 3, 2019, 3:34 PM

A Texas energy firm didn’t give its investors enough information about its finances in connection with a proposed merger worth $3.977 billion, a Jan. 2 complaint said.

WildHorse Resource Development Corp. left out information about its financial prospects and its advisers’ valuation analyses in the proxy statement it filed with the U.S. Securities and Exchange Commission, according to the complaint filed in the U.S. District Court for the Southern District of New York. Investors need that information to properly evaluate Chesapeake Energy Corp.'s bid for the firm, the complaint said.

A shareholder vote on the merger is scheduled for Jan. 31, according to the complaint. The investors seek to delay the vote until they receive the requested information or recover damages if the vote goes ahead.

WildHorse’s proxy statement left out cash flow projections for both companies, according to the complaint. The statement touted cost savings, but left out detailed information about the projected synergies, the complaint said.

The proxy statement didn’t include the inputs and assumptions the financial advisors used in their analyses, according to the complaint. Without this information, investors can’t decide whether to trust the advisors’ fairness opinions, the complaint said.

WildHorse representatives didn’t immediately respond to a Jan. 3 request for comment.

The case is Burely v. Wildhorse Therapeutics Inc., S.D.N.Y., No. 1:19-cv-00036, complaint filed 1/2/19.

To contact the reporter on this story: Jennifer Bennett in Washington at jbennett@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; C. Reilly Larson at rlarson@bloomberglaw.com

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