APA Corp To Acquire Callon Petroleum For Around $4.5 Bln; APA Down In Pre-market

(RTTNews) - APA Corp. (APA), an oil and natural gas company, Thursday announced that it has entered into a definitive agreement to acquire Callon Petroleum Co. (CPE) in an all-stock transaction valued at around $4.5 billion.

Following this news, APA stock is currently trading down around 5 percent and Callon is trading up around 5 percent in pre-market activity.

Under the agreement terms, each common stock of Callon will be exchanged for 1.0425 shares of APA common stock, representing an implied value of $38.31 per share based on the closing price of APA common stock on January 3.

The company is anticipated to issue around 70 million common shares for this deal.

After the closing of the transaction, APA shareholders are expected to own approximately 81 percent of the combined company, and existing Callon shareholders are expected to own the remaining 19 percent.

The company plans to retire the existing debt at Callon and replace it with APA term loan facilities totaling $2.0 billion.

Additionally, upon closing of the deal, a representative from Callon will join the APA board.

The transaction is expected to boost APA's presence with pro forma production of more than 500,000 barrels of oil equivalent or BOE per day and a pro forma enterprise value of over $21 billion.

Callon's assets provide additional scale to APA's operations as it has nearly 120000 acres. This will increase APA's oil production as a percentage of BOE's in the Permian to 43 percent from 37 percent in the third quarter.

JPMorgan Chase Bank, N.A., Citigroup Global Markets Inc. and Wells Fargo Bank, National Association, LLC have jointly committed $2 billion to fund the deal.

In pre-market activity, APA shares are trading at $35 down 4.76% on the Nasdaq and Callon shares are trading at $35.22, up 4.67% on the New York Stock Exchange.