OREANDA-NEWS. February 09, 2011. Chevron has sweetened its offer to Atlas Energy’s shareholders and will pay an additional 10 cents a share to settle a court case against the USD 3.2 billion deal, a development that leaves Reliance Industries (RIL) with limited choices. Mukesh Ambani’s RIL was interested in buying Atlas Energy but was kept in the dark about Chevron’s bid for the natural gas producer.

 United States’ second largest energy player, Chevron, is paying more after a section of Atlas Energy’s shareholders dragged the company and its directors to court, alleging that Chevron was buying Atlas cheap. However, the natural gas company’s certain member-shareholders, including vice-chairman Jonathan Cohen and CEO Edward Cohen, are excluded from the additional 10 cents offer.

Analysts are skeptical about a rival offer and feel that the deal between Atlas and Chevron is almost sealed. The additional 10 cents a share “doesn’t really move the needle too much”, Fadel Gheit, a New York-based analyst with Oppenheimer & Co, told a foreign news agency. “There will be no white knight. It’s a done deal.”

Back home too analysts don’t have high expectations of RIL topping Chevron’s offer. RIL has hired Perella Weinberg Partners and Kirkland & Ellis to advise on possible options.The deal with Chevron restricts Atlas from soliciting competing offers. In case of a counter-bid, Chevron can match the offer. Moreover, Atlas Energy will have to fork out USD 97 million as a break-up fees if the deal with Chevron doesn’t work out.

Atlas Energy has called for a shareholders meeting on February 16 to consider and vote on the deal. If a majority of the shareholders vote for the deal, RIL will either have to accept Chevron as its new partner in the shale gas venture in Pennsylvania or exit from the venture. RIL declined to comment on its strategy.

Before the Chevron’s offer, Atlas Energy had formed a joint venture with RIL to develop shale gas fields in Pennsylvania. RIL’s investment in the venture is USD 1.4 billion. In fact, RIL had outbid Chevron to form a partnership with Atlas Energy in April 2010. RIL and Chevron don’t share a great chemistry. Two years ago, the US oil giant had picked up a 5% stake in RIL’s Jamnagar refinery. Chevron had the option to increase the stake to 29% but refrained from doing so.

This is the second such instance in recent months where an Indian company’s foreign joint venture partner has become a takeover target. Tata Steel, which has a joint venture with Australia’s Riversdale Mining for a coal project in Mozambique, Africa, saw the miner getting a AUSD 3.9-billion buyout offer from Rio Tinto.