Marathon Oil Shareholder Seeks to Block Conoco Takeover

A shareholder in Marathon Oil has filed a lawsuit seeking to stop an acquisition of the company by ConocoPhillips, claiming that the price Conoco agreed to pay undervalued the company.

Per a Bloomberg report on the news, investor Martin Siegel alleged in his filing that the acquisition could deprive Marathon Oil shareholders of some $6 billion in company value. Siegel also accused the company’s management and its adviser Morgan Stanley of misrepresenting the deal with Conoco to shareholders when it sought their backing for the move.

Conoco and Marathon Oil struck their acquisition deal in May when Conoco agreed to take over the target company in a deal worth $22.5 billion, including the assumption of $5.4 billion in debt.

“There are too many players. Scale matters, diversity matters, and we are going through a natural cycle of that in the business,” Conoco’s chief executive Ryan Lance said at the time.

“It’s healthy for our business. It’s the right thing to be doing for our business,” according to ConocoPhillips’ top executive.

Conoco expected the deal with Marathon Oil to immediately contribute to its earnings, cash flows, and overall performance. The tie-up was estimated to boost Conoco’s market value to over $150 billion. That surge in market cap will extend Conoco’s lead as the largest independent producer and place it broadly on the same scale as majors, above BP and behind Shell, according to Enverus Intelligence Research.

Yet in July, the Federal Trade Commission requested more information on the planned merger between Conoco and Marathon Oil for its review of the deal in what is turning out to be a busy year for the regulator. The two companies said they were cooperating fully with the FTC and expected the deal to be finalized by the end of the year. Now, this lawsuit could mean another delay for the merger.

By Irina Slav for Oilprice.com

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