Chesapeake Energy Corporation (NASDAQ: CHK) stock jumped over 3% during intraday trading Thursday after revealing plans to acquire rival Southwestern Energy (SWN) in a monumental all-stock transaction valued at $7.4 billion.
Chesapeake Energy (CHK) is poised to become the largest natural gas producer in the U.S. following the announcement of its acquisition of rival Southwestern Energy (NYSE: SWN) in an all-stock deal valued at $7.4 billion.
As part of the deal, Chesapeake will pay $6.69 per share for Southwestern, representing a 3% reduction from the stock’s closing price on Wednesday. In addition, Southwestern investors will receive 0.0867 Chesapeake shares for every share they own.
Chesapeake noted that the acquisition will offer high-quality, large-scale acreage in Appalachia and Haynesville (in northwest Louisiana and East Texas), with a net gas production of about 7.9 billion cubic feet. The company clarified that the collaboration between the two drilling entities includes 5,000 gross locations and a 15-year inventory.
Chesapeake also mentioned that the newly formed entity will adopt a yet-to-be-disclosed name, with Chesapeake shareholders holding a 60% stake and existing Southwestern shareholders retaining 40%. The completion of the transaction is expected in Q2, 2023.
Nick Dell’Osso, the CEO of Chesapeake, expressed that the merger will establish a deep inventory of advantaged assets adjacent to high-demand markets.
The acquisition would enable Chesapeake, the second-largest natural gas producer in the United States, to surpass the leading EQT Corp. (EQT).
Chesapeake Energy (NASDAQ: CHK) shares rose 3.16% to $79.62 on Thursday, while Southwestern Energy (NYSE: SWN) shares fell 2.47% to $6.72.
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