Chesapeake $7.4 bln deal finds safety in numbers

Southwestern Energy Co

11/01/2024 17:53

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
    By Robert Cyran
       NEW YORK, Jan 11 (Reuters Breakingviews) - The gas
company’s bid for Southwestern looks investor-friendly, with a
low premium, cost savings and the prospect of cash payouts. Amid
a wider energy M&A rush, boss Nick Dell’Osso can also take
comfort from being neither the first nor surely the last to take
an acquisitive leap.
    Full view will be published shortly.
    Follow @rob_cyran on X
         
    CONTEXT NEWS 
    Chesapeake Energy said on Jan. 11 it had agreed to buy
Southwestern Energy in an all-stock deal valued at $7.4 billion
based on Chesapeake’s closing price on Jan. 10. Southwestern
Energy shareholders will receive just under 0.09 shares of
Chesapeake for every share they hold.
    The offer is worth $6.69 per share based on closing prices
on Jan.10, roughly a 5% premium based on Southwestern’s closing
share price on Jan. 4, the day before news of a possible deal
emerged. Chesapeake shareholders would own about 60% of the
combined firm, and Southwestern 40%.
    The deal would make the combined company one of the largest
U.S. producers of natural gas, with current net production of
about 7.9 billion cubic feet equivalent per day. 
    Chesapeake declared bankruptcy in 2020 and emerged in 2021
with about $8 billion less debt. It exited the Eagle Ford basin
in 2023, selling oil and gas assets for more than $3.5 billion,
to focus on gas from the Marcellus and Haynesville basins.

 (Editing by John Foley and Sharon Lam)
 ((For previous columns by the author, Reuters customers can
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