Robbins LLP: Acquisition of Crestwood Midstream Partners LP (CMLP) by Crestwood Equity Partners LP (CEQP) May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Crestwood Midstream (NYSE: CMLP) by Crestwood Equity (NYSE: CEQP). On May 6, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Crestwood Equity will acquire Crestwood Midstream. Under the terms of the agreement, Crestwood Midstream shareholders will receive the equivalent of $18.76 for each share of Crestwood Midstream common stock.
Is the Proposed Acquisition Best for Crestwood Midstream and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Crestwood Midstream is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $18.76 merger consideration represents a premium of only 17.2% based on Crestwood Midstream’s closing price on April 5, 2015. This premium is significantly below the average one-day premium of nearly 22.5% for comparable transactions within the past three years. Further, the $18.76 merger consideration is below the target price of $26.00 set by an analyst at Ladenburg Thalmann & Co. on March 2, 2015; the target price of $22.00 set by an analyst at Hilliard Lyons on February 24, 2015; and the target price of $22.00 set by an analyst at Raymond James on November 25, 2014.
On May 6, 2015, Crestwood Midstream released its earnings results for its 1st quarter 2015, reporting strong quarterly earnings. Adjusted EBITDA was $124.7 million, a 26% increase, compared to the first quarter 2014. Net income was $21.7 million, a 295% increase compared to the first quarter 2014. In commenting on these results, Crestwood Midstream Chairman, President, and Chief Executive Officer Robert G. Phillips remarked, “Crestwood Midstream delivered another strong quarter showing the growing contribution of investments completed in late 2013 and 2014, the benefit of our fixed-fee contract portfolio relative to the commodity price volatility experienced since mid-2014, and lower overall operating costs due to our successful cost-cutting initiative completed in the first quarter 2015.”
Crestwood Midstream last traded above the offer price on December 2, 2014, trading as high as $18.98 and closing at $18.44. In the last three years, Crestwood Midstream has traded as high as $26.01 on April 29, 2013, closing at $25.26 on the same day.
In light of these facts, Robbins LLP is examining Crestwood Midstream board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Crestwood Midstream shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Crestwood Midstream shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.