Stone Energy Corp. (SGY) has agreed to purchase sister oil company Boi d’Arc Energy Inc. (BDE) for a reported $1.8 billion. Under the terms of the merger agreement, Bois d’Arc stockholders will receive $13.65 in cash and 0.165 shares of Stone common stock for each share of Bois d’Arc common stock. This merger will result in one of the biggest oil and gas production companies in the Gulf of Mexico.
Stone will fund the merger using existing cash on its balance sheet, borrowings from a proposed new $700 million credit facility underwritten by Bank of America, and the issuance of approximately 11 million shares of Stone common stock. The merger is expected to close in the third quarter of this year.
The boards of directors of both companies have approved the merger agreement, and each will recommend the transaction to its respective stockholders for approval. Completion of the transaction is subject to stockholder approval of Stone and Bois d’Arc, regulatory approvals, and other customary conditions. After closing, it is estimated that the Stone stockholders will own approximately 72% of the combined company, and the Bois d’Arc stockholders will own approximately 28% of the combined company.
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