Street Calls of the Week
LONG BEACH/DALLAS - California Resources Corporation (NYSE:CRC) announced Monday it will acquire Berry Corporation (NASDAQ:BRY) in an all-stock transaction valued at approximately $717 million, including Berry’s net debt. Berry, which currently has a market capitalization of $257 million and generates an EBITDA of $380 million, has maintained strong operational efficiency with a gross profit margin of 55%.
Under the terms of the agreement, Berry shareholders will receive 0.0718 shares of CRC common stock for each Berry share, representing a 15% premium based on the closing prices on September 12. Existing CRC shareholders are expected to own approximately 94% of the combined company upon closing. According to InvestingPro analysis, Berry is currently trading below its Fair Value, with additional metrics and insights available in the Pro Research Report, which provides comprehensive analysis of 1,400+ top stocks.
The transaction will create a larger California energy producer with combined second-quarter 2025 production of approximately 161,000 barrels of oil equivalent per day, 81% of which is oil. The merged entity will hold approximately 652 million barrels of oil equivalent in proved reserves, with 87% classified as proved developed. Berry brings a stable dividend yield of 3.63% and has maintained dividend payments for eight consecutive years, as revealed by InvestingPro data.
CRC expects to achieve annual synergies of $80-90 million within 12 months after closing, with approximately half implemented within six months. The company anticipates the deal will be accretive to cash flow metrics, with projected second-half 2025 per share accretion to both operating cash flow and free cash flow exceeding 10% before estimated synergies. Berry’s strong financial position is evidenced by its attractive PEG ratio of 0.44, suggesting efficient growth potential relative to its current valuation.
As part of the acquisition, CRC will also own C&J Well Services, Berry’s California-focused oilfield services subsidiary, which the company said will enhance its well maintenance capabilities.
CRC plans to refinance Berry’s outstanding debt using cash on hand and borrowings under its Credit Agreement. The transaction, unanimously approved by both companies’ boards, is expected to close in the first quarter of 2026, subject to regulatory approvals and Berry shareholder approval.
CRC’s executive management team will lead the combined company from its Long Beach headquarters. The information in this article is based on a press release statement from the companies.
In other recent news, Berry Petroleum Corp announced its Q2 2025 earnings, which showed a significant earnings per share (EPS) miss but an impressive revenue beat. The company reported an EPS of $0, which was below the expected $0.034, representing a 100% negative surprise. However, Berry Petroleum’s revenue stood at $210.08 million, exceeding expectations by 36.19%. These earnings results are crucial for investors as they assess the company’s financial performance. The earnings announcement led to a decrease in Berry’s stock price, although specific stock price movements are not the focus here. Investors and analysts will likely keep a close eye on Berry Petroleum’s future earnings releases and strategic decisions. These developments reflect the company’s current financial standing and market performance.
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