Crescent Energy to Acquire SilverBow in $2.1B Deal

Crescent Energy Company (NYSE: CRGY) and SilverBow Resources, Inc. (NYSE: SBOW) have announced a definitive agreement for Crescent to acquire SilverBow in a transaction valued at $2.1 billion. The transaction will create the second-largest operator in the Eagle Ford, with substantial free cash flow generation and a disciplined capital allocation framework.

Under the terms of the agreement, SilverBow shareholders will receive 3.125 shares of Crescent class A common stock for each share of SilverBow common stock, with the option to elect to receive all or a portion of the proceeds in cash at a value of $38 per share, subject to possible pro-ration with a maximum total cash consideration for the transaction of $400 million.

The transaction offers compelling value for all shareholders, with the combined company becoming the second-largest operator in the Eagle Ford, creating synergies of $65 to $100 million through immediate cost of capital savings and operating efficiencies.

Upon completion of the transaction, Crescent shareholders will own between approximately 69% and 79% and SilverBow shareholders will own between approximately 21% and 31% of the combined company, on a fully diluted basis and dependent on the final cash consideration at closing.

The combination has been unanimously approved by the boards of directors of both companies and is targeted to close by the end of the third quarter of this year.

After the close, the Crescent board of directors will increase to 11 members with the addition of 2 directors to be designated by SilverBow. John Goff will continue to serve as non-executive chairman, and David Rockecharlie will continue to serve as chief executive officer of the combined company.

Crescent's financial advisors in connection with the acquisition are Jefferies LLC, as lead advisor, and Wells Fargo, with Vinson & Elkins LLP serving as counsel. The special committee retained Intrepid Partners, LLC as financial advisor and Richards, Layton & Finger LLP as counsel. SilverBow's joint financial advisors are BofA Securities, Inc. and Evercore, with Gibson, Dunn & Crutcher LLP serving as counsel.

Crescent and SilverBow plan to host a joint conference call and webcast on May 16, 2024, to provide further details about the transaction.

This acquisition marks a significant move in the energy sector, creating a leading growth through acquisition company with a premier Eagle Ford position and substantial value creation potential. The market has reacted to these announcements by moving the company's shares -5.8% to a price of $11.54. Check out the company's full 8-K submission here.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.