Robbins LLP: Acquisition of Targa Resources Partners LP (NGLS) by Targa Resources Corporation (TRGP) May Not Be in Unitholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Targa Resources Partners LP (NYSE: NGLS) by Targa Resources Corporation (NYSE: TRGP). On November 3, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Targa Resources Corp. will acquire Targa Resources Partners. Under the terms of the agreement, Targa Resources Partners unitholders will receive 0.62 units of Targa Resources Corp. for each unit of Targa Resources Partners they own, the value of which is equivalent to $36.09 per unit of Targa Resources Partners.
Is the Proposed Acquisition Best for Targa Resources Partners and Its Unitholders?
Robbins LLP’s investigation focuses on whether the board of directors at Targa Resources Partners is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $36.09 merger consideration represents a premium of only 15.1% based on Targa Resources Partners’ one-month average closing price. This premium is significantly below the average one-month premium of nearly 23.3% for comparable transactions within the past five years. Further, the $36.09 merger consideration is significantly below the target prices of 13 analysts, ranging from $55.00 set by an analyst at Tudor Pickering & Co. on March 24, 2015, to $37.00 set by an analyst at Morgan Stanley on October 9, 2015. In the last three years, Targa Resources Partners traded as high as $83.49 on June 19, 2014, and most recently traded above the merger consideration – at $36.14 – on August 4, 2015.
On November 3, 2015, Targa Resources Partners reported earnings results for its third quarter 2015. Adjusted EBITDA for the quarter was $305.8 million, an increase of 23% compared to the same period last year. In commenting on these results, Targa Resources Partners Chief Executive Officer Joe Bob Perkins remarked, “Targa’s third quarter results highlight the benefits of our diverse asset footprint, fee-based margin and our continued focus on cost savings and execution. We continue to develop attractive projects, demonstrate access to capital markets and execute in a cost effective manner, positioning Targa to successfully navigate the challenging environment ahead.”
In light of these facts, Robbins LLP is examining Targa Resources Partners’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.
Targa Resources Partners 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.
Targa Resources Partners 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.