Investor Alert: PHX Minerals Sale Under Scrutiny as Kahn Swick & Foti Questions Deal Fairness

The proposed sale of PHX Minerals Inc. (NYSE: PHX) to WhiteHawk Income Corporation has drawn attention from investor rights firm Kahn Swick & Foti, LLC (KSF), which has launched an investigation into whether the $4.35-per-share offer adequately compensates shareholders or if the process suffered from critical flaws. With the transaction poised to close by early Q3 2025, PHX investors face a pivotal decision—one that demands scrutiny of both the financial terms and the procedural rigor behind the deal.

The Deal’s Terms and KSF’s Concerns

Under the agreement, WhiteHawk will acquire PHX in an all-cash transaction valued at approximately $187 million, including net debt. The $4.35-per-share price represents a 21.8% premium over PHX’s May 7 closing price and a 23.9% premium over its unaffected price as of October 2024. While the Board of Directors unanimously endorsed the deal after a “strategic alternatives process,” KSF questions whether this premium truly reflects PHX’s intrinsic value.

KSF, led by former Louisiana Attorney General Charles C. Foti, Jr., has a history of challenging mergers that shortchange shareholders. In this case, the firm highlights concerns over disclosure completeness, director independence, and the speed of the tender offer, which may pressure shareholders to act without sufficient time to evaluate alternatives. KSF invites PHX investors to contact them at 855-768-1857 to discuss potential legal recourse.

Financial Analysis: Does the Premium Hold Water?

To assess fairness, investors must weigh the offer against PHX’s financial health and asset value. Recent Q1 2025 results show:
- Net income of $4.4 million ($0.12 per share), a stark rebound from Q4 2024’s loss.
- Adjusted EBITDA of $6.2 million, up from $5.4 million sequentially.
- Reduced debt to $19.8 million, lowering its debt-to-EBITDA ratio to 0.86x, a strong indicator of financial flexibility.

The $4.35 offer contrasts with PHX’s book value per share of approximately $4.12 (based on Q1 2025 equity of $48.4 million and 11.3 million shares outstanding). While the premium exceeds book value, it leaves little margin for error if PHX’s assets are undervalued.

Strategic Rationale and Risks

WhiteHawk stands to gain 1.8 million gross unit acres in premier basins like the Haynesville Shale and SCOOP/STACK, boosting its total acreage to 3.1 million. This expansion aligns with WhiteHawk’s focus on natural gas assets, which benefit from rising demand in power generation and export markets. However, risks remain:
- Regulatory delays: The tender offer requires SEC filings and approvals, which could extend the timeline.
- Integration challenges: Merging PHX’s 6,500+ wells and undeveloped locations into WhiteHawk’s portfolio demands operational precision.
- Market volatility: Natural gas prices, while stable, could weaken if global supply outpaces demand.

Key Takeaways for Shareholders

1. Act with urgency: The tender offer’s time-sensitive nature leaves little room for procrastination.
2. Demand transparency: KSF’s investigation underscores the need for full disclosure on valuation methodologies and competing bids.
3. Consider the alternatives: PHX’s assets could command higher valuations in a robust bidding war, though no such competition has been reported.

Conclusion: A Fair Deal or a Missed Opportunity?

The $4.35-per-share offer appears modest when viewed against PHX’s improved financials and strategic asset base. While the premium outperforms recent trading levels, the lack of a competitive bidding process raises red flags. KSF’s involvement signals that shareholders should demand clarity on valuation assumptions and the Board’s due diligence.

With WhiteHawk’s $187 million price tag resting on a 0.86x debt-to-EBITDA ratio and $6.2 million quarterly EBITDA, the deal may be conservative. Investors holding PHX should analyze the tender offer documents carefully—and consult with legal advisors—to ensure they aren’t leaving value on the table. As the Haynesville Shale’s potential continues to unfold, this could be a case where patience and scrutiny yield better outcomes than a hasty acceptance.

For further analysis, review PHX’s SEC filings (Schedule TO and 14D-9) and contact KSF at https://www.ksfcounsel.com/cases/nyse-phx/.