Newfield Exploration Company Misled Stockholders Concerning Proposed Merger, Class Action Alleges

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A proposed class action out of Delaware federal court claims that Newfield Exploration Company, its CEO and the board of directors misled stockholders concerning a potential $5.5 billion acquisition by Encana Corporation.

The suit takes issue with a proxy statement released by the defendants that allegedly failed to fully inform stockholders of the terms of the merger while encouraging them to vote in its favor. More specifically, due to omissions concerning the company’s financial projections, valuation analyses and the defendants’ potential conflicts of interest, stockholders were unable to take an educated stance on the proposal, the case argues.  

Notably, the complaint says the company’s board and executive officers stood to receive “unique benefits” in the merger that weren’t available to public stockholders, such as the conversion of restricted stock units to cash payouts and substantial severance packages should they be terminated in the acquisition.