Thursday, July 30, 2015

Faruqi & Faruqi Case: Crestwood Midstream Partners

Faruqi & Faruqi, LLP Announces Filing of a Class Action Lawsuit Against Crestwood Midstream Partners LP

Notice is hereby given that Faruqi & Faruqi, LLP has filed a class action lawsuit in the United States District Court for the Southern District of Texas, Houston Division, case no. 4:15-cv-2101, on behalf of unitholders of Crestwood Midstream Partners LP (“Crestwood Midstream” or the “Company”) (NYSE: CMLP) who held (and continue to hold) Crestwood Midstream securities acquired on or before May 5, 2015.
On May 5, 2015, the Company entered into a Purchase Agreement and Plan of Merger (“Merger Agreement”) under which Crestwood Equity Partners LP (“Crestwood Equity”) will acquire all of the outstanding units of Crestwood Midstream through a newly formed subsidiary of Crestwood Equity. The unit-for-unit transaction is valued at approximately $7.5 billion. The transaction and vote are expected to occur in the third quarter of 2015.
The complaint charges Crestwood Midstream Partners LP, its Board of Directors, Crestwood Equity Partners LP, and affiliated corporate entities and individuals with violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).
Pursuant to the terms of the Merger Agreement, which was unanimously approved by the Company’s Board of Directors (the “Board” or “Individual Defendants”), Crestwood Midstream unitholders will receive a fixed exchange ratio of 2.75 units of Crestwood Equity for each unit of Crestwood Midstream they own. Crestwood Midstream and Crestwood Equity claim that this exchange ratio amounts to a deal consideration of approximately $18.75 per Crestwood Midstream common unit, based on Crestwood Equity’s closing price of $6.82 on May 5, 2015. However, Crestwood Equity units are currently trading at significantly lower prices, closing at $3.71 on July 28, 2015.
Furthermore, the Merger Agreement includes no protective collar on the transaction’s exchange ratio, and as a result, the implied dollar value of the Merger Consideration is susceptible to significant depreciation based upon the future performance of Crestwood Equity’s stock. Significantly, since the Proposed Transaction was announced, Crestwood Equity’s stock price has dropped approximately 38%, from $6.82 on May 5, 2015, to $4.23 on July 14, 2015. Thus, any premium Crestwood Midstream’s unitholders were supposedly receiving has vanished in light of the significant decrease in the value of Crestwood Equity’s stock price.
The complaint alleges that the S-4 Registration Statement (the “S-4”) filed with the Securities and Exchange Commission (“SEC”) on June 17, 2015 provided materially incomplete and misleading disclosures, thereby violating Sections 14(a) and 20(a) of the Exchange Act. The Registration Statement denies Crestwood Midstream’s unitholders material information concerning the financial and procedural fairness of the Merger. The complaint also alleges that 2.75 units of Crestwood Equity for each unit of Crestwood Midstream is an inadequate exchange ratio, as Crestwood Midstream has experienced significant growth in recent months and has consistently exceeded management’s revenue and earnings expectations. The offer price also fails to adequately value Crestwood Midstream’s prospects for future growth.
If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today.  Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.   

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