ConocoPhillips is acquiring Concho Resources in a $9.7 billion all-stock transaction that will create a company with an approximately $60 billion enterprise value.
The two companies came to the agreement with the full consensus of both boards of directors, the two companies said in a joint release published on BusinessWire.com.
“Concho is a tremendous fit with ConocoPhillips. Together, ConocoPhillips and Concho will have unmatched scale and quality across the important value drivers in our business: an enviable low cost of supply asset base, a strong balance sheet, a disciplined capital allocation approach, ESG excellence and great people,” Ryan Lance, ConocoPhillips chairman and CEO, said in the release. “Importantly, the transaction meets our long-stated and clear criteria for mergers and acquisitions because it is completely consistent with our financial and operational framework.”
Each common stock share of Concho Resources is to be exchanged for 1.46 shares of ConocoPhillips common stock under the agreement.
Based on the Oct. 13 closing prices for both stocks, the deal gives a 15% premium, the joint release said.
“Thanks to our team, Concho is one of the largest unconventional shale producers in the United States, with a high-quality asset base, a culture of operational excellence, safety and efficiency, and a strong balance sheet” Tim Leach, Concho Resources chairman and CEO, said in the release.
The deal will permit ConocoPhilips to capitalize on the diversified scale and resources of both companies as a single entity, according to the release.
“Through consolidation, we will apply our assets, capabilities and superior performance to the business model of the future, creating a better-capitalized company with enhanced capital discipline, more flexibility and an unwavering commitment to sustainability,” Leach said in the release. “From our position of strength and in light of market trends, our board of directors and management team evaluated a wide range of options and unanimously determined that combining with ConocoPhillips is the best path forward for Concho and our shareholders. We look forward to bringing together our complementary operations, teams and cultures to realize the upside potential of this exciting combination.”