Marathon Oil MRO shareholder Martin Siegel has filed a lawsuit to stall the proposed acquisition of the company by ConocoPhillips COP, one of the largest exploration and production companies globally. The investor argued that the proposed acquisition deal significantly undervalues Marathon.
The acquisition was announced in May 2024, with ConocoPhillips agreeing to buy Marathon for approximately $22.5 billion. The price includes $5.4 billion of net debt. Siegel stated that the shareholders of Marathon could lose about $6 billion in company value if the proposed acquisition takes place.
He also accused MRO’s management and financial advisor of misrepresenting the deal to the company’s shareholders while seeking their approval. Siegel claimed that management of Marathon and the advisors have a conflict of interest in this deal. The CEO of MRO stands to gain $70 million in stock grants on the deal’s closure, and the company’s financial advisor would gain a hefty amount in fees.
ConocoPhillips emphasized that the acquisition of Marathon would a strategic move toward expanding its business. The company anticipates that the deal would contribute positively to its earnings, cash flows and overall performance. Furthermore, the combined entity’s market value is expected to reach more than $150 billion.
The increase in the market capitalization for ConocoPhillips is expected to further solidify its position as one of the largest exploration and production players, per a report by Enverus Intelligence Research.
However, both ConocoPhillips and Marathon received a request from the U.S. Federal Trade Commission (“FTC)” for providing more details regarding the proposed deal. COP had stated that both parties are working together and cooperating with the FTC’s request to finalize the acquisition deal by the end of 2024.
Zacks Rank and Key Picks
Currently, MRO and COP carry a Zacks Rank #3 (Hold) each.
Some better-ranked stocks in the energy sector are SM Energy SM and TechnipFMC plc FTI. SM Energy presently sports a Zacks Rank #1 (Strong Buy), while TechnipFMC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy is an upstream energy firm operating in the prolific Midland Basin and the South Texas regions. For 2024, the company expects its production to increase from the prior-year reported figure, signaling a bright production outlook.
TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. The company’s total backlog witnessed a record high of $13.9 million in the second quarter of 2024, indicating a year-over-year increase of 4.51%. This growing backlog ensures strong revenue growth for the company in the future.
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