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Chesapeake And Southwestern Energy To Merge In $7.4 Billion Deal
Once the merger is finalized, the combined energy companies will have a market capitalization of nearly $20 billion and will become the largest natural gas producer in America.
The all-stock transaction will see Southwestern investors receive 0.0867 shares of Chesapeake for each share of Southwestern they own, with the merger valuing Southwestern stock at $6.69 U.S.
The deal discounts Southwestern Energy’s stock, which is trading at $6.89 U.S. per share currently. The merged company will assume a new name, though it hasn’t been announced yet.
The combined companies should produce 7.9 billion cubic feet of natural gas each day, making it the largest natural gas producer in the U.S.
Synergies from the merger are estimated at $400 million U.S., and the new company hopes to raise its dividend payment to shareholders by 20% over five years.
The deal is expected to close in this year’s second quarter.
Chesapeake Energy’s stock has declined 14% over the last year to trade at $77.18 U.S. per share.
The stock of Southwestern Energy has gained 20% in the past 12 months to trade at $6.89 U.S. a share.
