Chesapeake Energy Corporation (CHK) and Southwestern Energy Company (NYSE:SWN) announced today their boards approved a merger valued at $7.4 billion.
This all-stock transaction, priced at $6.69 per share, is based on Chesapeake's closing price on January 10, 2024. The merger entails Southwestern shareholders receiving 0.0867 shares of Chesapeake common stock for each share of Southwestern common stock at the closing.
Considering the exchange ratio and share prices on January 10, 2024, the merged entity is set to boast an enterprise value of approximately $24 billion. The anticipated completion timeframe is set for the second quarter of 2024.
SWN stock fell 4.5% in pre-market while CHK shares are up 0.1%.
Following the transaction, Chesapeake shareholders are expected to hold around 60%, with Southwestern shareholders owning about 40% of the combined company on a fully diluted basis.
This merger is poised to create a premier energy company, leveraging a leading natural gas portfolio in proximity to high-demand markets, the two companies said in a press release.
"This powerful combination redefines the natural gas producer, forming the first U.S. based independent that can truly compete on an international scale," said Nick Dell'Osso, Chesapeake's President and Chief Executive Officer.
“The union creates a deep inventory of advantaged assets adjacent to high demand markets, allowing for the application of proven operational practices and the power of an Investment Grade quality balance sheet to drive significant synergies benefiting energy consumers and shareholders alike.”