By Lisa Kerner
Charlotte, N.C., Nov. 2 - Denbury Resources Inc. agreed to acquire Encore Acquisition Co. in a cash-and-stock deal valued at approximately $4.5 billion, including the assumption of debt and the value of the minority interest in Encore Energy Partners LP, it was announced on Monday.
The combined company will continue to be known as Denbury Resources Inc. and will have its headquarters in Plano, Texas.
Encore stockholders will receive $15.00 in cash and $35.00 in Denbury common stock subject to both an election feature and a collar.
The merger agreement gives Encore stockholders the option to receive all stock or all cash, subject to proration so that the overall mix of consideration is 70% Denbury common stock and 30% cash, Denbury said.
The collar mechanism is limited to a 12% upward or downward movement in the Denbury share price, according to a Denbury news release.
If Denbury stock trades between $13.29 and $16.91, Encore stockholders will receive between 2.0698 and 2.6336 shares of Denbury common stock per Encore share. The number of shares will not be higher or lower than these share amounts if Denbury common stock trades outside the range.
Both oil and gas companies' boards of directors have approved the transaction, which is expected to close in the first quarter of 2010.
Denbury said it will fund the deal with a combination of equity and debt. The company has received a commitment letter from J.P. Morgan to fund the cash portion of the consideration.
J.P. Morgan Securities Inc. advised Denbury, and Barclays Capital Inc. advised Forth Worth-based Encore.
| Acquirer: | Denbury Resources Inc.
|
| Target: | Encore Acquisition Co.
|
| Announcement date: | Nov. 2
|
| Transaction total: | $4.5 billion
|
| Price per share: | $15.00 in cash and $35.00 in Denbury common stock
|
| Expected closing: | First quarter of 2010
|
| Stock price for acquirer: | NYSE: DNR: $14.60 on Oct. 30
|
| Stock price for target: | NYSE: EAC: $37.07 on Oct. 30
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
