Tellurian(NYSEMKT: TELL) has found a buyer, and the deal offers an impressive 75% premium to where the stock closed on Friday.
Shares of Tellurian soared 66% higher on Monday morning after the natural gas exporter agreed to be acquired by Woodside Energy Group(NYSE: WDS).
Value over uncertainty
Tellurian has taken investors on a wild ride over the last decade. The company was founded in 2016 by Charif Souki, the architect of successful energy companyCheniere Energy. He had a plan to borrow from the Cheniere playbook and build a liquified natural gas (LNG) export terminal.
LNG is in demand worldwide, and the United States has an abundance of the fuel. But transporting LNG is difficult and new facilities are hard to get by regulators, meaning there was great promise in Tellurian's proposed Driftwood facility -- assuming the company could bring it to market.
Alas, a series of financial and operational missteps have plagued the company. Souki is gone, and Tellurian has been considering options.
Over the weekend, Australia's Woodside agreed to acquire Tellurian for $900 million. The price works out to $1 per share, a substantial premium to Tellurian's Friday close. Including debt, the deal is valued at about $1.2 billion.
"This transaction provides substantial and certain value for our shareholders," Martin Houston, executive chair of Tellurian's board, said in a statement. "After careful consideration of Tellurian's opportunities and challenges, the board and senior management weighed an immediate and significant cash return against the risks and costs associated with the timeline to [final investment decision] and determined that this offer is in our shareholders' best interest."
Is Tellurian stock a buy?
The announcement is likely bittersweet for many Tellurian holders. Though the price is well above the stock's $0.57 Friday close, it is also more than 90% below Tellurian's all-time high. There is a good chance that many investors in Tellurian will not be made whole.
But as Houston said, given Tellurian's predicament, the payout is likely the best shareholders could have hoped for. Existing investors should hope the deal closes as planned, but there is no reason for newcomers to buy in now.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
