New York hedge fund and Atlas trio wants to foil the EQT-Rice deal

A New York hedge fund and a trio behind Atlas Energy companies past and present have joined forces to foil the $6.7 billion deal between EQT Corp. and Rice Energy Inc. announced last month.

Jana Partners LLC, an activist investment firm whose most recent effort helped push the sale of Whole Foods to Amazon, has spent nearly half a billion dollars since April buying up shares of EQT.

On Monday, a public filing disclosed that Jana will use its 5.8 percent stake in the Pittsburgh-based oil and gas company to mount a campaign to get EQT shareholders to vote down its acquisition of Rice. Jana also wants the company to immediately separate all of its natural gas midstream assets from its exploration and production side, which should be the sole focus of the firm, Jana thinks.

Natalie Cox, a spokesperson for EQT, said the company “seeks to maintain an open dialogue with investors and respects their opinions and perspectives.” 

As for Jana’s charge that EQT’s drilling and midstream divisions are being undervalued under the same umbrella, Ms. Cox said the company doesn’t disagree.

“EQT has acknowledged that there is a sum-of-the-parts discount and EQT management has committed to evaluating options and devising a plan to address this discount by the end of 2018,” she said.

Jana, on the other hand, is seeking “an immediate breakup.” To advance its plan, the hedge fund has recruited Edward Cohen, CEO of Atlas Energy Group; his son, Jonathan Cohen, who heads a private investment firm down the block from Jana’s offices in Manhattan; and Daniel Herz, president of Atlas. It plans to nominate Jonathan Cohen and Mr. Herz to EQT’s board.

The Cohens and Mr. Herz have spent a total of nearly $7 million of their own money to buy up EQT shares in the past several weeks.

The trio has “significant operational and financial expertise, including experience creating significant shareholder value in a company with a comparable structure, set of assets, and geography to the (EQT),” Jana’s filing stated.

That’s likely a reference to Atlas’s sale of its Marcellus assets to Chevron in 2011 for $4.3 billion. In 2015, Atlas sold its midstream assets to Targa Resources for $7.7 billion.

Jana, meanwhile, has a history of agitating corporate deals. It stands to make about $300 million from the $13.7 billion sale of Whole Foods to Amazon, which has not endeared the hedge fund to Whole Foods CEO John Mackey. Mr. Mackey’s exact words were: “greedy bastards.”

Downtown-based EQT announced its plans to acquire Rice Energy two weeks ago in a deal that would make the Pittsburgh company the biggest producer of natural gas in the country.

Anya Litvak: or 412-263-1455.

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