Chesapeake Energy (NASDAQ:CHK) stock is climbing higher on Thursday after the oil and natural gas exploration company announced a $7.4 billion deal with Southwestern Energy (NYSE:SWN).
That deal has Chesapeake Energy and Southwestern Energy combining in an all-stock transaction. This values shares of SWN stock at $6.69 per share. The offer has Southwestern Energy shareholders receiving .0867 shares of CHK stock for each share of SWN that they own.
When the deal closes, it will create a premier energy company with an enterprise value of $24 billion. The split of ownership will be current CHK shareholders owning 60% of the company, while the remaining 40% will belong to current SWN stockholders.
On that same note, the board of directors of the combined company will include 11 members. Seven of these will be Chesapeake Energy directors, and the other four will be from Southwestern Energy. The company also plans to adopt a new name once the merger is complete.
Nick Dell’Osso, president and CEO of Chesapeake Energy, said the following about the deal:
“The world is short energy and demand for our products is growing, both in the U.S. and overseas. We will be positioned to deliver more natural gas at a lower cost, accelerating America’s energy reach and fueling a more affordable, reliable, and lower carbon future.”
Timing of the CHK Stock Deal
Chesapeake Energy and Southwestern Energy are expecting the deal to close in the second quarter of 2024. That will happen after the companies get approval for the merger from regulators and shareholders.
CHK stock is up 4.4%, and SWN stock is down 1% as of Thursday 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.
