Bronco Drilling Company, Inc. Buyout Under Investor Investigation

If you purchased Bronco Drilling Company, Inc. (NASDAQ:BRNC) and currently continue to hold those NASDAQ: BRNC shares, and/or if you have any information relating the investigation, you have certain options and you should contact the Shareholders Foundation, Inc.

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Company Name(s): 
Bronco Drilling Company
Affected Securities: 

The announcement that Bronco Drilling Company, Inc. will be acquired by Chesapeake Energy Corporation prompted an investigation on behalf of investors of Bronco Drilling Company, Inc. (NASDAQ:BRNC) over possible breaches of fiduciary duty.

The investigation by a law firm concerns whether certain directors and officers at Bronco Drilling Company, Inc. or others breached their fiduciary duties in connection the proposed takeover.

On Friday, April 15, 2011, Bronco Drilling Company, Inc. (NASDAQ/GS: BRNC) and Chesapeake Energy Corporation (NYSE:CHK) announced that they have entered into an agreement for Chesapeake Energy Corp. to acquire Bronco Drilling Company for approximately $315 million, including debt, net working capital and outstanding warrants.

Under the agreement, Chesapeake Energy Corp. will make a cash tender offer to acquire all outstanding shares of Bronco Drilling Compan’s common stock at a price of $11.00 per share.

Bronco Drilling Company said the $11.00 per share purchase price represents premiums of 6% and 24% over the closing price of Bronco's common stock on the NASDAQ on April 14, 2011 (the date of signing of the definitive agreement) and the average closing price for the 90-calendar day period ending on April 14, 2011, respectively.

Shares of Bronco Drilling Company, Inc. (NASDAW: BRNC) rose already from under $10 on Wednesday to $10.40 on Thursday April 14, 2011. Then on Friday, April 15, 2011 BRNC shares jumped in response to the takeover news to slightly above $11 per share.

However, BRNC shares traded recently above the current offer. BRNC shares traded already on April 4 at $11.34 per share and on March 31, 2011 at $11.30 per share. In addition several analysts raised Bronco's target price to $13.50.

Further Bronco Drilling Company’s financial performance was increasing lately for its investors. Bronco Drilling’s 12months Total Revenue increased from $102.90million in 2009 to $124.40million in 2010.

Additionally Third Avenue Management LLC, on behalf of its investment advisory clients, and Inmobiliaria Carso, S.A. de C.V., which are Bronco Drilling Company's largest shareholders and collectively own or have dispositive authority over approximately 32% of Bronco Drilling Company's outstanding common stock, have already committed to tender all their shares into the Chesapeake Energy Corp offer.

Therefore the investigation concerns whether the Bronco Drilling Board of Directors undertook an adequate and fair sales process to obtain fair consideration for all shareholders of Bronco Drilling Company, Inc. (NASDAQ:BRNC) and breached their fiduciary duties to Bronco Drilling (BRNC) shareholder by failing to adequately shop the Company before entering into any transaction.
The investigation concerns also whether Chesapeake Energy Corporation would underpay for NASDAQ:BRNC shares, thus unlawfully harming Bronco Drilling stockholders. A potential class action lawsuit would seek to maximize the amount of money and information NASDAQ BRNC shareholders would receive in a buyout, so the law firm.