Chesapeake And Southwestern Energy To Merge In All-stock Deal

(RTTNews) - Chesapeake Energy Corp. (CHK) and Southwestern Energy Co. (SWN), on Thursday announced an all-stock merger deal valued at $7.4 billion, or $6.69 per share, based on CHK's closing price on January 10.

Under the terms, the holders of each Southwestern share will receive 0.0867 share of Chesapeake.

Following the completion of deal, which is expected in the second quarter, the combined company would have an enterprise value of around $24 billion. Post transaction, CHK shareholders will own approximately 60 percent, and Southwestern shareholders will own around 40 percent of the new company.

The combination is expected to immediately add to the cash flow and other financial metrics.

Through Chesapeake's existing shareholder return framework, the merger expects an around 20 percent rise in dividends per share over five years.

"Identified synergies will enhance shareholder value through improved capital efficiencies and operating margins driven by longer laterals, lower drilling and completion costs, G&A reductions, and the utilization of shared operational infrastructure," Chesapeake said.

Following the merger, Mike Wichterich will serve as Non-Executive Chairman, whereas Nick Dell'Osso as CEO of the combined company.

The new company will be headquartered in Oklahoma City while maintaining a material presence in Houston.

CHK was trading up by 0.76 percent at $77.77 per share in the pre-market trade on the Nasdaq.

SWN was trading down by 2.18 percent at $6.74 per share in the pre-market trade on the New York Stock Exchange.