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.

Deal Details

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.

Stock Performance

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.

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