Activist hedge fund Jana Partners has acquired a 5.8% stake in EQT and urged the company to halt its purchase of Rice Energy for $6.7bn.
In a regulatory filing, Jana Partners said that EQT should split the company’s business into two, separating its exploration and production business from its midstream business.
Jana, which started purchasing EQT shares in April, is now the fourth largest shareholder in the company.
The hedge fund believes that EQT would face problems from delay in Rice deal and tax structure, a source familiar with the matter told Reuters.
Jana expects that the company would “thrive” if it focuses only on exploration and production.
EQT spokeswoman Natalie Cox said in a statement said: "EQT seeks to maintain an open dialogue with investors and respects their opinions and perspectives.”
Jana said that it intends to have discussions with EQT’s management, shareholders and other interested parties regarding voting against shareholder approval of the acquisition of Rice Energy.
In June, US-based natural gas producer EQT entered into an agreement to take over Rice Energy for about $6.7bn.
The transaction is expected to boost EQT’s position as a major natural gas producer in the Appalachian Basin.
Besides, the acquisition is expected to complement the infrastructure footprint of EQT Midstream Partners.
The acquisition also cover Rice’s midstream assets, including a 92% stake in Rice Midstream GP Holdings, which holds 100% of the general partner incentive distribution rights and 28% of the limited partner interests in Rice Midstream Partners, and the retained midstream assets currently held at Rice.
Rice Energy is an independent natural gas and oil company focused on exploration and development of natural gas and oil assets in the Appalachian Basin.
The transaction was expected to be completed in the fourth quarter of 2017, subject to customary closing conditions.
Image: The transaction is expected to strengthen EQT’s position in the Appalachian Basin. Photo: courtesy of supakitmod / Freedigitalphotos.net.