On December 17, 2009 Doyle Lowther LLP filed a securities class action lawsuit on behalf of public shareholders of XTO Energy, Inc. following XTO’s agreement to be acquired by Exxon Mobil Corp. Shareholders allege XTO’s Board breached its fiduciary duties by agreeing to the transaction in exchange for lucrative, illict payoffs for XTO’s senior executives.
XTO Energy engages in energy exploration and acquires energy-producing properties. On December 14, 2009 XTO’s Board agreed to a transaction in which Exxon Mobil will acquire all the outstanding common stock of XTO Energy. Shareholders allege XTO’s Board agreed to onerous “deal lockup” provisions, ensuring XTO is sold to Exxon Mobil for inadequate consideration.
Shareholders allege the acquisition fails to appropriately compensate XTO’s public shareholders. Plaintiffs further allege XTO’s senior executives have improper personal financial interests in the merger, failed to act in the best interests shareholders, and never should have approved the transaction without first undertaking an appropriate market canvass and negotiating with independent bidders.
Financial analysts immediately questioned the transaction’s prudence, especially since energy prices are expected to rebound in the near future. At the same time XTO’s Board agreed to the acquisition, its senior executives entered into so-called “consulting agreements” with Exxon providing XTO’s senior executives with tens of millions of dollars in compensation — illict payoffs for entering into the acquisition. Shareholders allege the Exxon acquisition is motivated by defendants’ desire to aggrandize their own financial positions and interests at the expense of XTO’s public shareholders.
Image from XTO's 2008 Annual Report to shareholders
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