On December 2, 2020, Judge Robert J. Colville of the U.S. District Court for the Western District of Pennsylvania upheld all nine claims brought by lead plaintiffs pursuant to the Securities Exchange Act of 1934 and the Securities Act of 1933. In doing so, Judge Colville found that the achievability of defendants’ purported synergies presented “a genuine issue of material, present fact,” as did EQT’s leaders’ post-acquisition statements touting the newly forged company’s successes. Judge Colville also rejected defendants’ argument that JANA’s assertions should have put investors on notice of the potential unreliability of their statements; to the contrary, Judge Colville held, defendants’ “consistent and strong” denials supported a finding that defendants at least spoke recklessly.

On September 19, 2019, Cohen Milstein, representing the Northeast Carpenters Annuity Fund and the Northeast Carpenters Pension Fund (“Northeast Carpenters”), was appointed Co-Lead Counsel in a securities class action against EQT Corporation (“EQT” or the “Company”).

Northeast Carpenters and its co-lead plaintiff the Government of Guam Retirement Fund (“Guam”) allege that EQT misrepresented the “substantial synergies” that were expected to arise from a planned merger with rival natural gas producer Rice Energy due to “the contiguous and complementary nature of Rice’s asset base with EQT’s.”

Case Background

Repeatedly throughout the proposed class period, activist investor JANA Partners LLC challenged the accuracy of EQT’s statements to investors about the purported benefits of its merger with Rice, calling the Company’s calculation of $2.5 billion in synergies “highly questionable.” In multiple letters to the Company, JANA argued that abutting acreage acquired in the Rice transaction would only marginally increase lateral well length—touted as the primary benefit of the merger—and even where parcels of newly acquired land were adjacent to land EQT already owned, many of those parcels had already been drilled out. Actual synergies, according to JANA, would be approximately $1.3 billion less than EQT was advertising. JANA also noted that EQT executives were improperly incentivized to complete the merger regardless of whether it was in the best interests of shareholders because of their compensation structure.

On October 25, 2018, EQT reported its financial results for the third quarter of 2018, revealing the truth: the merger had not only failed to achieve the represented benefits, it had created inefficiencies.  In particular, the Company had not been able to achieve the lateral well length it told investors was possible. EQT shares fell 13% on the news, dropping from a close of $40.46 per share on October 24, 2018 to $35.34 on October 25, 2018—a single-day erasure of nearly $700 million in shareholder value. Over the next several days, the price of EQT shares fell to as low as $31.00 per share—less than half what the Company was worth when the acquisition closed in November 2017.

Plaintiffs are pursuing the action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5 on behalf of all investors who purchased EQT common stock between June 19, 2017 and June 17, 2019, inclusive. Plaintiffs are also asserting claims under Section 20A of the Exchange Act on behalf of investors who purchased shares of EQT common stock contemporaneously with Defendants’ insider sales.  Additionally, Plaintiffs are asserting claims under Section 14(a) of the Exchange Act and SEC Rule 14a-9 on behalf of shareholders of EQT and Rice who held EQT or Rice shares as of the record dates of September 25, 2017 and September 21, 2017, respectively, and were entitled to vote at an EQT or Rice special meeting on November 9, 2017 with respect to the acquisition.  Finally, Plaintiffs are bringing claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) on behalf of all persons who acquired EQT common stock in exchange for their shares of Rice common stock in the acquisition.  

The case is styled: In re EQT Corporation Securities Litigation, No. 2:19-cv-00754, U.S. District Court, Western District of Pennsylvania.