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Story by The Wall Street Journal

A Delaware court has held up an energy industry merger, a rare move for a judge in a live deal.

Vice Chancellor John Noble put on ice C&J Energy Services Inc. ’s merger with a unit of Nabors Industries Ltd. , finding C&J’s board didn’t adequately shop the company, according to people familiar with his decision.

The judge, at a hearing Monday in the Delaware Court of Chancery, suspended the deal for 30 days, during which he ordered the C&J board to feel out other potential buyers, according to the people. No written order was immediately available.

The deal, announced in June, was unusual as C&J Energy was the nominal buyer, agreeing to pay Nabors 62.5 million shares and $940 million in cash for the unit, which provides hydraulic-fracturing services to energy producers. But Nabors is to retain control of the combined entity—with a 53% stake to C&J Energy shareholders’ 47%.

Vice Chancellor Noble found that because the C&J Energy shareholders were essentially turning over control of their investment to Nabors, the deal was subject to a corporate law theory that required the board to take steps to get the best possible price. The suit, brought by lawyers for C&J Energy shareholders, said the board failed to take such steps.

One person familiar with Nabors’s thinking said the merger agreement had been set up to account for this legal concern with long-term protection for the C&J Energy shareholders.

C&J Energy’s market capitalization is about $1 billion. Nabors’s is about $5 billion.