Robbins LLP: Acquisition of LRR Energy, L.P. (LRE) by Vanguard Natural Resources, LLC (VNR) May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of LRR Energy, L.P. (NYSE: LRE) by Vanguard Natural Resources, LLC (NASDAQ: VNR). On April 20, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Vanguard will acquire LRR Energy. Under the terms of the agreement, LRR Energy shareholders will receive 0.55 Vanguard common units per LRR Energy common unit, for a value of $8.93 per LRR Energy common unit share based on Vanguard’s closing price on April 20, 2015.
Is the Proposed Acquisition Best for LRR Energy and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at LRR Energy is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $8.93 merger consideration represents a premium of only 12.6% based on LRR Energy’s closing price on April 20, 2015, which is below the average one-day premium of nearly 14.8% for comparable transactions within the past three years. Further, the $8.93 merger consideration is significantly below the target price of $10.00 set by an analyst at Ladenburg Thalmann & Co. on April 16, 2015. LRR Energy last traded above the offer price – at $8.96 – on December 5, 2014.
On March 3, 2015, LRR Energy reported strong quarterly earnings for its fourth quarter 2014. Annual revenues for 2014 rose 63.3% to $187.9 million while net income expanded to $52.7 million, a 209% increase from the previous year. Fourth quarter 2014 revenues were up 212.6%, while net income rose 150% compared to the same period a year ago. Additionally, LRR Energy has beat consensus analyst estimates for sales, adjusted net income, and adjusted EPS in three out of the past four quarters. In commenting on these results, LRR Energy Chairman and Co-Chief Executive Officer Eric Mullins remarked, “Overall, we are pleased with our results for the fourth quarter of 2014. Our financial and operating results improved over the third quarter in part due to our Stroud acquisition that closed on October 1, 2014.”
In light of these facts, Robbins LLP is examining LRR Energy’s 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.
LRR Energy 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.
LRR Energy 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.