Crescent Energy Co (NYSE:CRGY) has reached an agreement to acquire SilverBow Resources Inc (NYSE:SBOW) for $2.1 billion.
This acquisition comes amid a proxy battle involving SilverBow's largest shareholder, Kimmeridge Energy Management Co.
SilverBow shareholders will receive 3.125 shares of Crescent Class A stock for each SilverBow share. Additionally, SilverBow investors have the option to take all or part of the payment in cash at $38 per share, capped at $400 million.
After close, the Crescent board of directors will increase to 11 members with the addition of 2 directors to be designated by SilverBow.
The transaction, which represents an 18% premium over SilverBow's last closing price, expands Crescent's operations significantly in the Eagle Ford shale basin in southeastern Texas.
Crescent, managed by KKR & Co Inc (NYSE:KKR) also maintains drilling activities in the Rocky Mountain region.
"The combination with SilverBow, which is expected to be immediately accretive to all key per share metrics, solidifies Crescent as a leading operator in the Eagle Ford and strengthens the company's growth platform with increased scale," said Crescent CEO David Rockecharlie.
This deal occurs as SilverBow battles Kimmeridge Energy for control of its board. Kimmeridge, holding a 13% stake in SilverBow, has been pushing for board seats after withdrawing its latest takeover bid.
Proxy advisors Institutional Shareholder Services and Glass Lewis have recommended SilverBow's board nominees.
SilverBow's stock, which has climbed 11% this year, fell 0.6% to $32.35 on Wednesday, valuing the company at approximately $826 million.
Including debt, SilverBow's enterprise value stands at about $1.9 billion. Crescent's shares dropped 0.8% to $12.25, giving it a market capitalization of roughly $2.2 billion.
Over the past three years, Crescent, with 15% ownership by KKR, has completed six acquisitions worth over $2 billion.
With the addition of SilverBow, Crescent becomes one of the largest operators in the Eagle Ford basin, alongside competitors such as EOG Resources Inc. (NYSE:EOG) and ConocoPhillips (NYSE:COP).
The transaction is expected to be closed by the end of the third quarter of this year. Crescent held $5.3 million in cash and equivalents as of March 31, 2024.
Jefferies LLC and Wells Fargo & Co (NYSE:WFC) are acting as Crescent's financial advisors for the deal, while BofA Securities Inc. and Evercore are advising SilverBow.
Price Action: CRGY shares are trading lower by 8.8% at $11.16 at last check Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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