PHX Minerals Sale Under Scrutiny: Is the $4.35 Deal Fair to Shareholders?

The sale of PHX Minerals Inc. (NYSE: PHX) to WhiteHawk Income Corporation has ignited a legal firestorm, with investor rights firm Halper Sadeh LLC launching an investigation into whether the $4.35-per-share cash offer adequately compensates shareholders. This article dissects the transaction’s terms, financial underpinnings, and the risks of undervaluation, while weighing the implications for PHX’s stakeholders.

The Terms of the Sale: A Premium, But at What Cost?

The $4.35-per-share offer represents a 21.8% premium over PHX’s closing price of $3.57 on May 7, 2025—the day before the deal was announced. This premium also surpasses the 30-day and 60-day volume-weighted average prices by 15.7% and 12.2%, respectively. While the uplift appears substantial, Halper Sadeh argues that shareholders deserve clarity on whether this price reflects PHX’s true value.

The stock closed at $3.58 on May 8, the day of the announcement, but the $4.35 offer represents a clear floor for its valuation. However, the firm’s investigation focuses on whether PHX’s board exhausted alternatives to maximize shareholder value. Key concerns include:

• Undervalued Assets: PHX’s mineral rights span 1.8 million gross acres in prolific basins like the Haynesville Shale and SCOOP/STACK, which WhiteHawk’s pro forma portfolio now values at $187 million.
• Improved Financials: PHX’s Q1 2025 results showed $6.2 million in adjusted EBITDA (up 34% year-over-year) and reduced debt to $19.8 million, improving its debt-to-EBITDA ratio to 0.86x. These metrics suggest PHX’s underlying value may exceed the $4.35 offer.

Halper Sadeh’s Case: Breach of Fiduciary Duty?

The law firm’s investigation hinges on three pillars:
1. Lack of Competitive Bidding: PHX’s board approved the offer without evidence of soliciting alternative bids, potentially stifling shareholder gains.
2. Hedging and Future Value: PHX’s hedging contracts (e.g., natural gas collars at $3.00–$5.15/Mcf through 2026) and 247 wells in progress or permitted suggest upside not captured by the current offer.
3. Disclosure Gaps: Shareholders may have been denied critical information about the transaction’s risks or synergies, violating securities laws.

Market Context: A Deal Driven by Debt or Strategy?

WhiteHawk’s acquisition aims to expand its mineral acreage to 3.1 million gross acres, but its financing—via new equity and existing debt—raises questions. PHX’s insiders, holding 10% of shares, have already pledged to tender their holdings, creating pressure to close the deal.

The data shows a clear upward trajectory: PHX turned a quarterly net profit of $4.4 million in Q1 2025 after losses in 2024, underscoring its improving fundamentals. This performance could support a higher valuation, but the board’s swift approval of the WhiteHawk offer leaves shareholders questioning.

The Dividend and Divestiture Paradox

PHX declared a $0.04 per share dividend for June 2025, payable to shareholders of record as of May 20. However, the dividend may be a final gesture before the merger closes, as WhiteHawk’s structure could halt future payouts. Meanwhile, the cancellation of PHX’s Q1 earnings call—typically a forum for discussing operational and financial details—suggests the board prioritizes deal certainty over transparency.

Legal Precedent and Shareholder Rights

Halper Sadeh’s probe aligns with 2025’s surge in merger-related litigation. For instance, similar cases against UnitedHealth Group and Krispy Kreme have led to increased compensation or settlements. PHX shareholders are urged to contact the firm by June 4, 2025, to evaluate their options. The contingent fee structure ensures no upfront costs, incentivizing the firm to pursue remedies like:
- Higher Offer Price: Through negotiations or litigation.
- Additional Disclosures: Clarifying PHX’s asset values or the merger’s financial assumptions.

Conclusion: A Premium, but Not Without Risk

The $4.35-per-share offer provides a 21.8% premium to PHX’s pre-announcement price, which may satisfy many shareholders. However, the investigation’s focus on fiduciary duty, asset valuation, and disclosure gaps suggests room for improvement.

Key Data Points:
- PHX’s $6.2 million Q1 EBITDA (up 34% YoY) and debt reduction to $19.8 million highlight operational strength.
- WhiteHawk’s 3.1 million gross-acre portfolio post-merger underscores strategic value but leaves questions about synergies.
- The 10% insider tender commitment raises concerns about conflicts of interest.

For shareholders, the path forward is clear: engage with Halper Sadeh to assess potential claims. While the deal’s closing by Q3 2025 seems likely, the investigation could force transparency or a better offer. In a market where 23.9% premiums over unaffected prices are common in fair deals, PHX’s shareholders deserve every dollar of that value.

Final Note: The clock is ticking. Shareholders holding PHX as of May 20, 2025, must act swiftly to protect their interests.