Shares of Southwestern Energy Co. (SWN) fell 3.5% in premarket trading on Thursday following the announcement of a merger with oil and gas company Chesapeake Energy Corp. (CHK). The anticipated $7.4 billion deal valued Southwestern's stock at a discount.
Under the terms of the agreement, Southwestern shareholders will receive 0.0867 Chesapeake shares for each Southwestern share they own. Based on the closing price of Chesapeake's stock on Wednesday at $77.18, this values Southwestern shares at $6.69 each, representing a 2.9% decrease from Wednesday's closing price of $6.89.
Wall Street Journal Report Sparks Stock Uptick
The Wall Street Journal had previously reported on January 5 that a merger between the two companies was imminent, leading to a 7.7% increase in Southwestern's stock price from then until Wednesday.
Creating a New Energy Powerhouse
Upon completion of the merger, the combined company will have an enterprise value of approximately $24 billion and will operate under a new name. The closing is expected to take place in the second quarter. Chesapeake Chief Executive Nick Dell'Osso stated that the merged entity aims to deliver more natural gas at a lower cost, contributing to a more affordable, reliable, and environmentally friendly energy future.
While Southwestern shares have experienced a 4.7% increase in value over the past three months, Chesapeake's stock has faced a decline of 12.5%. In contrast, the S&P 500 has gained 9.3% during the same period.