Resolute Energy Corp (NYSE: REN) is running for the top in the market this morning after news broke that the company would be acquired. The acquisition, which comes at a strong premium, excited investors who are sending the stock on a run for the top. Today, we’ll talk about the acquisition news, what we’re seeing from the stock and what we’ll be watching for ahead.
REN Climbs On Acquisition News
As mentioned above, Resolute Energy is having a great day in the market today after news broke that the company would be acquired. In a press release issued early this morning, Cimarex (XEC) and REN announced that they have entered into a definitive acquisition agreement.
Under the terms of the agreement, XEC will acquired REN in a cash and stock transaction. The transaction values the compnay at $35.00 per share. This, combined with the $710 million in debt assumed by Cimarex brings the total acquisition value to approximately $1.6 billion. It’s also worth mentioning that the transaction was approved by the Boards of Directors of both companies. In a statement, Thomas E. Jorden, Chairman, President and CEO at Cimarex, had the following to offer:
This high-quality, bolt-on asset is tailor-made for Cimarex… It is a perfect fit with our existing Reeves County position and will allow us to leverage our knowledge and deliver superior results over a broader asset base for the benefit of both Cimarex and Resolute shareholders. The Resolute assets are expected to generate free cash flow in 2019, basically funding any additional development capital from the start. I want to compliment Rick Betz and the entire Resolute team on the outstanding job that they have done in building these premier Reeves County assets.
The above statement was followed up by Rick Betz, CEO at REN. Here’s what he had to say:
Today’s transaction further demonstrates the commitment of the Board of Directors and entire management team at Resolute to maximizing long term value for the company’s shareholders. Our dedicated team of talented professionals has worked tirelessly to position this company to be able to capitalize on the tremendous opportunity this merger represents. The combination of our assets and people with the incredibly strong platform that Tom and his team at Cimarex have built will surely lead to superior results for the shareholders of both companies. We look forward to working through a seamless transition with the Cimarex team.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. In the case of REN, the news proved to be overwhelmingly positive. Not only did the company announce that it would be acquired, the premium offered in this acquisition sits around 15%, offering immediate value to shareholders. So, it comes as no surprise that excited investors are pushing the stock up. At the moment (11:38), REN is trading at $35.07 per share after a gain of $4.58 per share or 15.02% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on REN. In particular, we’re interested in following the story surrounding the acquisition. While the agreement is a definitive one and the transaction has been approved by the Boards of both companies, it is still subject to customary closing conditions and regulatory approval. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!