Crescent Energy Company (NYSE: CRGY) has announced its acquisition of Silverbow Resources, Inc. (NYSE: SBOW) in a transaction valued at $2.1 billion. This move is expected to position Crescent as the second-largest operator in the Eagle Ford region. The deal is structured such that 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 combined company will have a balanced portfolio of high-quality and long-life assets, generating substantial free cash flow governed by disciplined, investor-first capital allocation. The transaction is expected to yield significant annual synergies of $65 to $100 million through immediate cost of capital savings and operating efficiencies.
Post-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 acquisition is subject to customary closing conditions, including approvals by shareholders of each company and typical regulatory agencies, and is targeted to close by the end of the third quarter of this year.
The combined company will be led by a management team and board with significant operating and investing expertise and is expected to remain headquartered in Houston.
Crescent's financial advisors in connection with the acquisition are Jefferies LLC, as lead advisor, and Wells Fargo. Meanwhile, Silverbow's joint financial advisors are BofA Securities, Inc. and Evercore.
Crescent and Silverbow plan to host a joint conference call and webcast on May 16, 2024, at 7:30 a.m. Central Time to discuss the details of the transaction.
The acquisition is expected to create a leading mid-cap E&P with a balanced portfolio of stable, low-decline, and highly cash-generative production, with a deep inventory of proven drilling locations, well-positioned for flexible capital allocation through commodity cycles. Today the company's shares have moved 12.4% to a price of $36.37. If you want to know more, read the company's complete 8-K report here.
