Chevron to pay 10 cents more to Atlas shareholders

In a move that could put further pressure on Reliance Industries (RIL), Chevron Corp, the second-largest US oil company, has decided to revise its bid and pay stakeholders of Atlas Energy an additional 10 cents a share.

Chevron made a $3.59 billion purchase bid for Atlas Energy on November 9, 2010. The additional 10 cents would add about $7.8 million to the overall deal value. Atlas Energy will hold a special shareholders’ meeting on February 16 to approve the proposed merger with Chevron Corp. However, certain shareholders, including Vice Chairman Jonathan Cohen and Chief Executive Officer Edward Cohen, are excluded from the additional 10 cents.

According to a filing with the US Securities and Exchange Commission, the revision in bid was to settle lawsuits by Atlas shareholders that alleged company directors breached fiduciary duties by agreeing to an inadequate merger price and using unfair process. The defendants denied any violations of duties.

Opposing the deal, one of the shareholders had dragged Atlas Energy’s board of directors to court, suing them in a Western Pennsylvania court in an effort to block the Chevron deal as it was alleged to be “intrinsically unfair” to shareholders.

RIL had last April formed a joint venture with Atlas Energy and agreed to pay $1.7 billion for a 40 per cent working interest in an underlying shale asset called Marcellus Shale. This included $340 million in upfront cash payment and $1.36 billion drilling carry.