Robbins Umeda LLP Is Investigating Frontier Oil Corporation Acquisition for Shareholders
Robbins Umeda LLP, a shareholder rights litigation firm, is investigating possible breaches of fiduciary duty and other violations of state law by members of the board of directors of Frontier Oil Corporation (NYSE: FTO) in connection with their efforts to sell Frontier Oil to Holly Corporation (NYSE: HOC).
On February 22, 2011, Frontier Oil and Holly announced that Holly will acquire Frontier Oil in an all-stock transaction. Under the terms of the merger agreement, Frontier Oil shareholders will receive 0.4811 Holly shares for each share of Frontier Oil common stock. The implied value of the stock consideration is approximately $26.99 per share. The transaction is expected to close early in the third quarter of 2011.
The investigation seeks to determine whether Frontier Oil’s board of directors undertook a fair process to obtain maximum value for its shareholders. Of note, the proposed consideration is at a discount to Frontier Oil’s February 17, 2011 stock price of $29.27. Further, at least one analyst has set a target price for Frontier Oil stock at $33.00 per share, more than six dollars higher than the proposed consideration.
Further, Robbins Umeda is investigating whether the directors and officers of Frontier Oil placed their own personal interests ahead of the interests of shareholders. Of particular note, Michael Jennings, current Chairman, President, and Chief Executive Officer of Frontier Oil, will serve as President and Chief Executive Officer of the combined company, while Doug Aron, Chief Financial Officer and Senior Vice President of Frontier, will serve as Senior Vice President of Strategic planning. In addition, upon the closing of the transaction, the board of directors of the new company will consist of seven current Frontier Oil board members.