Shares of Southwestern Energy Co.
SWN,
fell 3.5% in premarket trading Thursday, after the natural gas company announced a merger with oil and gas company Chesapeake Energy Corp.
CHK,
as the $7.4 billion deal, which had been expected, valued Southwestern’s stock at a discount. Under terms of the deal, Southwestern shareholders will receive 0.0867 Chesapeake shares for each Southwestern share they own. Based on Wednesday’s closing price for Chesapeake’s stock at $77.18, that values Southwestern shares at $6.69 each, or 2.9% below Wednesday’s close of $6.89. The Wall Street Journal had reported on Jan. 5 that a merger was imminent, lifting Southwestern’s stock by 7.7% since then through Wednesday. The combined company, which would have a combined enterprise value of about $24 billion, will assume a new name at closing, which is targeted to occur in the second quarter. “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,” said Chesapeake Chief Executive Nick Dell’Osso. Southwestern shares have gained 4.7% over the past three months through Wednesday while Chesapeake’s stock has dropped 12.5% and the S&P 500
CHK,
has gained 9.3%.
