How much will the Chesapeake and Southwestern Energy merger cost? Where will it be headquartered? What we know
Chesapeake Energy announced Thursday it will merge with Houston’s Southwestern Energy Company, making the combined company the largest natural gas producer in the United States.
Here’s what we know so far:
How much will the Chesapeake merger with Southwestern cost?
The transaction is valued at $7.4 billion, or $6.69 per share, according to a press release from Chesapeake Energy.
Where will the new company be headquartered?
The merged company will be in Oklahoma City while maintaining a material presence in Houston.
In Houston, the company will build a global marketing and trading presence to supply lower cost, lower carbon energy, according to the release.
By combining acreage, the combined company has over 5,000 gross locations and 15 years of inventory.
Chesapeake Energy headquarters: What would a Chesapeake Energy merger mean for massive OKC campus?
What will the company be called?
When the transaction closes, the company will assume a new name, according to the release.
What does synergy mean and what’s the synergy for the merger?
In business, a synergy is when the value of two firms combined is higher than the pre-merger value of both companies.
The annual operational and overhead synergies of the Chesapeake and Southwestern merger is about $400 million, according to the press release.
How much will shareholders from Chesapeake and Southwestern own of the combined company?
Chesapeake shareholders will own approximately 60% and Southwestern shareholders will own approximately 40% of the combined company.
At closing, Southwestern shareholders will receive a fixed exchange ratio of 0.0867 shares of Chesapeake common stock for each share of Southwestern common stock owned. According to the release, this means that the combined company would have an enterprise value of approximately $24 billion.
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Additionally, the combined company expects an approximate 20% improvement in dividends per share over five years through Chesapeake’s existing shareholder return framework.
Who will govern the combined company? What to know about the Chesapeake Energy CEO
The company will have 11 members on its board of directors comprised of seven representatives from Chesapeake and four representatives from Southwestern, according to the release.
Nick Dell'Osso, the current president and CEO of Chesapeake, will retain that role with the combined company. Mike Wichterich, chair of Chesapeake’s board of directors, will serve as non-executive chairman.
Who is the Chesapeake CEO? What to know about Nick Dell'Osso Jr., who joined in 2021
When will the transaction close?
The transaction is targeted to close in the second quarter of 2024, according to the release.
This article originally appeared on Oklahoman: What we know about the Chesapeake Southwestern merger: Stocks, costs
