HOUSTON - Crescent Energy Company (NYSE:CRGY) and SilverBow Resources, Inc. (NYSE:SBOW) announced today that they have reached a definitive agreement for Crescent to acquire SilverBow in a transaction valued at approximately $2.1 billion. The merger is expected to position Crescent as the second-largest operator in the Eagle Ford (NYSE:F) region, enhancing its asset portfolio and financial framework.
The transaction stipulates that SilverBow shareholders will receive 3.125 Crescent Class A common stock shares for each SilverBow share they own. Alternatively, they can opt for a cash payment of $38 per share, with the total cash consideration capped at $400 million.
The final ownership split of the combined entity will depend on the cash or stock election outcomes, with Crescent shareholders owning between 69% and 79% and SilverBow shareholders between 21% and 31%.
Crescent's Chairman, John Goff, expressed confidence in the merger's potential to create a premier mid-cap exploration and production (E&P) company, emphasizing the anticipated growth and value creation. David Rockecharlie, CEO of Crescent, noted the transaction's accretive nature to key per-share metrics and the strategic fit of SilverBow's assets with Crescent's portfolio.
Sean Woolverton, CEO of SilverBow, highlighted the transaction's delivery of an attractive premium to SilverBow shareholders and the opportunity to partake in the combined company's future through Crescent shares or immediate cash liquidity.
The boards of both companies have unanimously approved the transaction, with a special committee of independent Crescent directors also giving unanimous consent. Crescent shareholders holding approximately 43% of the outstanding common stock have agreed to support the transaction.
The deal is subject to customary closing conditions, including shareholder and regulatory approvals, and is expected to close by the end of the third quarter of 2024.
Upon completion, Crescent's board will expand to include two directors designated by SilverBow. The company will maintain its headquarters in Houston, with John Goff continuing as Non-Executive Chairman and David Rockecharlie as CEO.
The financial advisors for Crescent are Jefferies LLC and Wells Fargo, with legal counsel from Vinson & Elkins LLP. Wells Fargo Bank, NA has provided $2.0 billion in committed financing. SilverBow's financial advisors are BofA Securities, Inc. and Evercore, with Gibson, Dunn & Crutcher LLP as legal counsel.
This transaction is based on a press release statement.
InvestingPro Insights
As Crescent Energy Company (NYSE:CRGY) sets its sights on becoming a major player in the Eagle Ford region through its acquisition of SilverBow Resources, investors are keenly observing the financial metrics that may influence the success of this merger. With a current market capitalization of $2.17 billion, Crescent Energy's financial health and growth prospects are critical for stakeholders.
One key metric that stands out is Crescent's revenue growth for the last twelve months as of Q1 2024, which experienced a decline of 19.63%. However, on a quarterly basis, the company has shown an uptick in revenue growth of 11.41% in Q1 2024. This suggests a potential turnaround that could align with the strategic benefits expected from the merger. Additionally, Crescent's gross profit margin remains robust at 54.67%, indicating the company's ability to maintain profitability on its sales.
On the valuation front, Crescent's Price to Book ratio as of Q1 2024 is 1.1, which may be attractive to value investors looking for assets priced closely to their book value. This valuation metric, along with the anticipated growth and value creation mentioned by Crescent's Chairman, could signal a favorable investment opportunity.
In terms of financial health, the InvestingPro Tips highlight that Crescent Energy is projected to become profitable this year, with net income expected to grow. However, it's important to note that the company has been quickly burning through cash and that short-term obligations exceed liquid assets, which could present liquidity concerns in the near term. Moreover, five analysts have revised their earnings upwards for the upcoming period, suggesting a positive outlook on the company's earnings potential.
Investors interested in a deeper dive into Crescent's financials and future projections can explore additional InvestingPro Tips available on the platform. There are six more tips that provide a comprehensive analysis, and by using the coupon code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
For those looking to make an informed decision on the Crescent-SilverBow merger, these insights and tips could provide a valuable perspective on the company's current standing and future potential.
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