Earthstone Energy (NYSE:ESTE) stock is rallying on Monday after the oil and gas company reached a $4.5 billion deal with Permian Resources (NYSE:PR).
This agreement has Permian Resources agreeing to acquire Earthstone Energy in an all-stock transaction. That deal will see investors acquire 1.446 shares of PR stock for each share of ESTE stock they hold.
The deal with Permian Resources represents a value of $18.64 per share for ESTE stock. That represents a nearly 15% premium over the stock’s closing price on Friday. After the deal, investors in ESTE will hold 27% of the combined company, with PR shareholders having the other 73%.
The boards of directors at both companies have already given their unanimous support to the deal. When it closes, the Permian Resources’ board will be expanded to add two representatives from Earthstone.
What This Means for ESTE Stock
When the deal closes, shares of ESTE stock will no longer exist. As for when that will happen, the two companies expect the deal to close by the end of the year. However, investors in ESTE stock will gain shares of PR stock when the deal is complete.
News of the merger has some 3.4 million shares of ESTE stock changing hands as of this writing. That’s well above its daily average trading volume of about 1.3 million shares. With that comes a 15.9% rally for the company’s shares on Monday morning.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
