(Reuters) – One of the top five shareholders in QEP Resources Inc plans to vote against its pending acquisition by Diamondback Energy Inc, saying a recent oil price rally makes the firm more valuable than the deal struck in December.
The Denver-based exploration and production company agreed to sell itself in an all-stock transaction which would exchange 0.05 shares of Diamondback common stock for each of its shares, equivalent to $2.29 per QEP share.
At the time, the deal valued QEP at $2.2 billion, inclusive of $1.6 billion of debt which Diamondback would assume.
However, in a Tuesday statement, Glazer Capital said it would vote against approving the acquisition at a shareholder meeting scheduled for March 16, and urged others to do likewise.
Glazer argues that QEP has not benefited from the recent rally in U.S. crude prices to the same extent as other small-cap producers, as its share price has been tethered to the larger Diamondback’s stock by the exchange agreement.
Therefore, Glazer said, “QEP shareholders would forfeit substantial value in return for grossly inadequate consideration” if they assented to the current exchange deal with Diamondback.
Year-to-date, QEP and Diamondback shares have risen 82% and 74% respectively. This has boosted QEP’s market value to $1.1 billion, while Diamondback is worth $13.3 billion.
Glazer has amassed 13.8 million shares in QEP to give it a 5.7% stake, according to its statement. This would make it the fifth-largest shareholder, according to data provider Refinitiv.
The New York-based investment firm first began buying shares in QEP in the fourth-quarter of 2020, regulatory filings show.