Acquisition Advisors | Lawsuit opposes Arena sale proposal
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09 Apr Lawsuit opposes Arena sale proposal

Published in Tulsa World
by: KYLE ARNOLD World Staff Writer
Thursday, April 08, 2010

Some shareholders of Arena Resources Inc. are questioning the company’s $1.55 billion proposed sale to Oklahoma City-based SandRidge Energy Inc. despite a 17 percent premium on the stock price.

Law firms across the country are examining the deal, especially since Arena management said earlier this year that the Tulsa-based company was not for sale.

Various shareholders say they are wary because the proposed $40 per share acquisition price is 6 percent lower than the company’s stock price on March 1.

In a lawsuit filed Tuesday in Tulsa County District Court, a Texas shareholder claims that Arena’s management and directors failed its shareholders by not advertising that the company was for sale.

Five other law firms — in New York, Pennsylvania, California and Texas — say they have launched investigations into the proposed sale.

Arena Resources CEO Phil Terry was not available for comment Wednesday.

“Shareholders (of Arena) would receive only $40 for their shares,” shareholder Thomas Slater stated in his lawsuit. “In fact, (Arena Resources) was trading at $42.69 as recently as March 2010 and this fact, along with the company’s lack of debt, provides every indication that the company’s long-term potential growth is strong.”

The company’s stock was selling for $37.41 before the acquisition was announced. Based on the deal announced Sunday, Arena shareholders would receive 4.7771 shares of common stock in SandRidge, plus $2.50 cents cash, for every share of stock in Arena they own.

A lawyer for the plaintiff declined to comment on the case.

The acquisition needs approval by shareholders of both Arena and SandRidge.

The deal means that 30 positions at Arena’s headquarters in Tulsa would move to Oklahoma City. Sand- Ridge is offering jobs to 100 field workers in New Mexico and Texas.

Shareholder lawsuits are common after large mergers and acquisitions are forged, but there is room for concern among Arena investors, said David Perkins, managing director of Acquisition Advisors in Tulsa.

“I would be mad if I was a shareholder,” he said. “The stock sold well below its 52-week high. Shareholders just want to make sure they got the total amount their stock was worth.”

Perkins also said it was unusual for a company to claim it was not for sale in the months preceding a deal.

“I would think you would want to shout from the rooftops that you were up for sale,” he said. “You would hope that they would run it like an auction.”

Perkins said that pressure from a potential buyer to keep a deal secret is commonplace.

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