'No-Premium’E&P Mergers May Prove Viable Strategy for US M&A

摘要

Shareholders have largely shunned shares of those E&P companies seeking to merge during the last year of much-needed consolidation deals.Premiums perceived as too high for low-valued companies have been a major sticking point,with investors insisting upon capital discipline and a focus on shareholder returns.But now a different calculus may be needed when determining how consolidation in the E&P space will play out.Following months of poorly received combinations,Colorado gas and oil producers PDC Energy and SRC Energy announced a merger that,for once,didn't tank their stocks by market close.The smaller Colorado-based E&P accepted a fixed exchange ratio of 0.15 8 shares of PDC for each share of its common stock,which represents an implied value of $3.99 per share based on PDC's closing price on Aug.23.That price amounts to a”take under”for SRC because its shares ended the same period at $4.15/share.