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Summary
- The combined diversified energy company will have an enterprise value of US$17 billion.
- Cabot’s stock fell over 8 percent, while Cimarex stock dropped around 10 percent on Monday morning.
Oil and natural gas exploration company Cabot Oil & Gas Corporation (NYSE:COG) said it agreed to merge with Cimarex Energy Co. (NYSE:XEC) and create a US$17 billion energy company.
Houston-based Cabot’s stock fell over 8 percent, while Cimarex stock dropped around 10 percent on Monday morning.
As part of the deal, shareholders of Cimarex will get 4.0146 Cabot common stocks for each share owned. Denver-based Cimarex’s shareholders to hold 50.5 percent stake in the new company, while Cabot investors to own the rest.
The merger will see the combination of Cabot's Marcellus Shale assets and Cimarex's Permian and Anadarko basins in the U.S. The merger will create a diversified energy company that will focus on free cash flow, said Cabot Chairman and CEO Dan O. Dinges.
Source: Pixabay
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The combined business will have a new name with its headquarters in Houston while maintaining the regional offices.
Dinges will become the executive chair on the combined company’s board. Cimarex Chairman Thomas Jorden will be the CEO and also serve on the board. Cabot's CFO, Scott Schroeder, will be the finance chief of the combined business. The new company’s board will have five directors, each from the current board of Cabot and Cimarex.
The new business will have 50 cents per share as its annual base dividend to be distributed quarterly. In addition, all common shareholders of the combined company will get a special dividend of 50 cents per share after the merger.
The all-stock merger is expected to close in Q4 of 2021. The transaction requires regulatory clearance and approval from the companies’ shareholders.
Stock Performance
Cabot’s stock trades on the New York Stock Exchange. It has a market capitalization of US$6.58 billion. The stock has grown 8 percent year to date as of May 21 closing price, while it declined 6 percent during the last one-year period.
Cabot stock has a 52-week trading range of US$15.76 to US$22.67. As of 9:46 am ET, the stock was trading at US$16.53, down 7 percent.
Meanwhile, NYSE-listed Cimarex has a market capitalization of US$6.66 billion. Cimarex saw its share price jump 85 percent year to date and 152 percent in the last one year. The stock has a 52-week trading range of US$22.39 to US$74.92.
As of 9:49 am ET, Cimarex stock was trading at US$64.85, down 8.91 percent.
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