Encore Acquisition Company Shareholder Files Lawsuit

An investor in Encore Acquisition filed a lawsuit in Delaware Chancery Court on behalf of current investors Encore Acquisition Company (Public, NYSE:EAC), who purchased the shares before October 30, 2009, over alleged breaches of fiduciary duty in connection with an alleged unfair takeover.

The plaintiff asked the judge to block a planned $4.5 billion cash-and-stock-swap takeover by Denbury Resources Inc. On November 01, 2009 Encore Acquisition Company (NYSE: EAC) and Denbury Resources Inc. (NYSE: DNR) announced that they have entered into a definitive merger agreement pursuant to which Denbury Resources will acquire Encore Acquisition in a transaction valued at approximately $4.5 billion. Under the proposed agreement, Encore Acquisition stockholders will receive $50.00 per share for each share of Encore Acquisition common stock, comprised of $15.00 in cash and $35.00 in Denbury Resources Inc common stock subject to both an election feature and a collar mechanism on the stock portion of the consideration. The Boards of Directors of both companies have unanimously approved the merger agreement. According to the complaint Encore Acquisition Company directors violated their duties by “failing to maximize shareholder value,” and instead of getting the highest price, they “abdicated their duties in order to secure a deal that furthers their own interests,” including options and other benefits.

A spokeswoman for Encore Acquisition, reportedly said the company doesn’t comment on pending litigation.

Shares of Encore Acquisition Company traded on Friday before the announcement between $39.58 and $37.07 per share. EAC shares were down from its 52weekHigh of $45.63 per share and $75.98 per share in June 2008. Encore Acquisition Company located in 2007 Total Revenue of $754.95million with a Net Income of $17.16million and in 2008 Total Revenue of $1.13542billion with a Net Income of $430.81million. Encore Acquisition Company, located Fort Worth, Texas, is engaged in the acquisition and development of oil and natural gas reserves from onshore fields in the United States. The Company's properties and oil and natural gas reserves are located in four core areas: the Cedar Creek Anticline (CCA) in the Williston Basin of Montana and North Dakota; the Permian Basin of West Texas and Southeastern New Mexico; the Rockies, which includes non-CCA assets in the Williston, Big Horn and Powder River Basins in Wyoming, Montana and North Dakota and the Paradox Basin of southeastern Utah, and the Mid-Continent area, which includes the Arkoma and Anadarko Basins of Oklahoma, the North Louisiana Salt Basin, the East Texas Basin and the Mississippi Salt Basin.