HOUSTON - Adams Resources & Energy, Inc. (NYSE American:AEN), a distributor of petroleum products, has disclosed recent legal actions related to its upcoming merger with Tres Energy LLC. The merger, initially announced on November 11, 2024, would result in Adams Resources becoming a wholly owned subsidiary of Tres Energy.
As of today, two complaints have been filed by purported stockholders of the company, challenging the adequacy of the disclosures provided in the proxy statement regarding the merger. These lawsuits, filed in early January 2025 in New York, seek to either enjoin the merger or claim damages and attorneys' fees. Despite these challenges, InvestingPro analysis shows the company maintains a moderate debt level with a debt-to-equity ratio of 0.47 and has consistently paid dividends for 31 consecutive years.
In addition to the lawsuits, Adams Resources has received demand letters from ten stockholders alleging similar disclosure insufficiencies under the Exchange Act. The company believes these claims are without merit and that no additional disclosures are required by law. However, to mitigate the risk of litigation potentially delaying the merger, Adams Resources has voluntarily decided to supplement the proxy statement with additional disclosures.
The updated information includes details on the financial analysis used to evaluate the merger, GulfStar's success fee, and the potential future employment arrangements for Adams's executive officers with the surviving corporation or its affiliates. Financial metrics from InvestingPro indicate current challenges, with a negative EPS of -$3.18 for the last twelve months and modest gross profit margins, though the company maintains a healthy current ratio of 1.04. For deeper insights into Adams Resources' financial health and detailed analysis, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Adams Resources has filed the definitive proxy statement with the SEC on December 20, 2024, and it is available on the SEC's website. The company has urged investors and security holders to read the proxy statement and other related documents carefully for a more complete understanding of the merger.
In other recent news, Adams Resources & Energy, Inc. has made significant progress in its ongoing merger process. The company recently revealed that Tres Energy LLC, the parent company in the merger agreement, has transferred all its rights and obligations to an affiliate, ARE Equity Corporation. This development is part of a strategic move aimed at enhancing the company's operational capabilities and market reach. Following this assignment, ARE Equity Corporation now holds complete ownership of the merger subsidiary, ARE Acquisition Corporation, and will position Adams Resources & Energy, Inc. as a fully owned subsidiary once the merger is effective.
In related developments, B.Riley has downgraded Adams Resources and Energy Inc. from a "Buy" to a "Neutral" rating following the company's agreement to a buyout by Tres Energy LLC. The new price target for the stock is now set at $38, down from the previous $45, aligning with the cash per share offer in the acquisition terms. The completion of this deal, which values Adams Resources & Energy at an enterprise value of $138.9 million, is expected in the first quarter of 2025.
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