Activist investor Jana Partners said EQT Corp.'s (NYSE: EQT) plan to save $2.5 billion after its acquisition of Rice Energy Inc. (NYSE: RICE) was "grossly exaggerated," further mounting pressure on the oil and gas producer to abandon the deal.
An analysis showed the combination with Rice Energy's assets would increase the average lateral length of a well by less than 1,000 ft, not the 4,000 ft increase that EQT claimed, Jana said in a letter to EQT's board on Sept. 20.
"Given the massive disparity between EQT's claims and what our analysis reveals, we are forced to question whether the Board conducted adequate diligence before approving this transaction," the hedge fund said.
Jana, which owns a 5.8% stake in EQT, has urged the company to abandon its $6.7 billion acquisition of Rice Energy and spin off its midstream business.
"EQT is confident that the present value of synergies to be realized are in excess of $2.5 billion," company spokeswoman Natalie Cox said.
Jana's letter comes just days after hedge fund D.E. Shaw & Co. LP urged EQT to spilt up its production and midstream units after closing the Rice Energy deal.
EQT and Rice Energy's shares were flat in extended trading.
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