EQT Corporation shareholder D.E. Shaw Group issues letter to board
EQT Corporation stockholder D. E. Shaw & Co., on behalf of certain investment funds advised by it that in the aggregate own an approximately 4.0% interest in the common stock and equivalents of EQT, sent a letter to the EQT board outlining a plan that it claims could unlock $8B of value for the company's shareholders-representing a 50% upside to the current stock price-and that could be completed during 1H18. The letter claims, among other things: "(...) we believe that EQT is substantially undervalued. (...) We also understand why investors are frustrated with the Company and its current strategy. In our view, these frustrations are justified in light of (i) the Company's poor equity performance, particularly given its low leverage and mix of premier midstream and production assets, (ii) the company's outlay of $1.85B (approximately 17% of its current market capitalization) to acquire additional acreage, despite the company's own share price consistently reflecting negative value for undeveloped acreage, and (iii) the uncertain benefits the company stands to achieve through the acquisition of Rice given the lack of a clear plan to unlock value following the transaction (...) In its response to public criticism of the Rice transaction, EQT has missed an opportunity to provide a clear value creation plan to its shareholders. Instead, EQT management has described the potential for an additional $7.5B in synergies without providing a commitment to achieve any portion of them-the kind of communication that puts valuable credibility at risk (...) In the accompanying presentation, we set forth a plan that allows EQT to acquire Rice and to deliver substantial value to shareholders. (...) The plan consists of the following three actions: 1. Carry Out a Separation of Production and Midstream Businesses. (...) 2. Restructure Midstream Businesses Through a Merger of EQM and RMP. (...) 3. Appoint Experienced Midstream Executives to the Board of EQT. (...) We look forward to working constructively together for the benefit of all EQT shareholders".