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The major merger of Chesapeake Energy Corporation and Southwestern Energy could close in the first week of October.
The waiting period in connection with the companies’ pending combination under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) has expired.
Upon closing, the combined company will be the largest natural gas producer in the USA and assume the name Expand Energy Corporation, Chesapeake said in a news release. It will begin public trading on the NASDAQ under the ticker symbol EXE at the open of trading the day after closing.
“The world is short [on] energy,” Chesapeake President and CEO Nick Dell’Osso said. “With a premium scaled position across leading natural gas basins in the United States, a peer-leading returns program and a resilient financial foundation, Expand Energy is uniquely positioned to compete on an international scale to expand America’s energy reach and deliver opportunity for the world’s energy customers”.
Chesapeake and Southwestern in January announced in a joint statement that they entered into an agreement to merge in an all-stock transaction valued at $7.4 billion, or $6.69 per share, based on Chesapeake’s closing price on January 10.
The merger completion was originally targeted for the second quarter but was delayed due to a request for more information and documentary materials from the U.S. Federal Trade Commission (FTC).
The two companies said that the strategic combination will create a premier energy company underpinned by a leading natural gas portfolio adjacent to the highest demand markets, premium inventory, resilient free cash flow, and an investment grade quality balance sheet.
In March, a group of U.S. senators and representatives wrote a public letter to FTC Chair Lina Khan urging it to investigate and block all anticompetitive Big Oil mergers, specifically naming the Chesapeake-Southwestern agreement, among others.
“We applaud the FTC for opening investigations of the Exxon-Pioneer, Chevron-Hess, and Occidental Petroleum-CrownRock acquisitions, the lawmakers wrote. “However, it is now even clearer that there is an anticompetitive pattern developing as Big Oil corporations race to consolidate the Permian Basin and other key American oilfields, and the FTC must take this pattern into account as it assesses each individual transaction”.
“We write concerning the wave of oil-and-gas industry consolidation, building on top of a longstanding consolidation trend, that threatens competition in the industry and could lead to higher prices and fewer choices for businesses across the supply chain, suppress worker wages, and make heating, cooling, and gas at the pump more expensive for consumers,” the lawmakers continued. “Instead of providing price relief to Americans at the pump, these oil and gas majors have used their record profits to fund expanded stock buybacks, benefiting only them and their shareholders.”
“If a small group of dominant firms is allowed to control this industry, American consumers and industry competition will only suffer. Therefore, we urge the FTC to extend its current investigations, open inquiries into these new deals, and take all appropriate actions to protect competition in this industry,” they continued.
The letter follows an earlier one sent in November 2023 by a group of U.S. senators calling on the FTC to investigate Exxon Mobil Corp’s proposed $60 billion acquisition of Pioneer Natural Resources and Chevron Corp’s proposed $53 billion acquisition of Hess Corporation.
To contact the author, email rocky.teodoro@rigzone.com
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