RSP Permian Inc (NYSE: RSPP) is having an overwhelmingly strong start to the trading session this morning, and for good reason. The company announced that it will be acquired. Of course, this news excited investors, sending the stock climbing. Today, we’ll talk about the acquisition, what we’re seeing from the stock, and what we’ll be watching for ahead.
RSPP To Be Acquired
As mentioned above, RSP Permian is having an overwhelmingly strong start this morning after announcing that it will soon be acquired. In a press release issued early this morning, RSP Permian announced that it has entered into a definitive agreement to be acquired by Concho Resources Inc. (CXO).
Under the terms of the agreement, the transaction is valued at $9.5 billion, a figure that includes RSPP outstanding debts. The acquisition will happen in an all-stock transaction under which shareholders of RSPP will be paid 0.320 shares of CXO per share owned. In a statement, Tim Leach, CEO at CXO, had the following to offer:
This transaction provides a compelling opportunity for both Concho and RSP shareholders to benefit from the strength of our combined company. The RSP team built an exceptional high-margin asset portfolio consistent with our playbook – large, contiguous positions in the core of the Permian Basin. And they did so with a strategy of maximizing well performance and returns, which provides substantial running room for continuous development with large-scale projects. This combination allows us to consolidate premier assets that seamlessly fold into our drilling program, enhance our scale advantage and reinforce our leadership position in the Permian Basin, all while strengthening our platform for delivering predictable growth and returns. We look forward to welcoming RSP’s employees as members of the Concho team.
The above statement was followed up by Steve Gray, CEO at RSPP. Here’s what he had to offer:
I am extremely proud of the RSP team and the high-quality position we built in the Permian Basin. As RSP has grown and we have seen the resource play develop in the Permian, we have come to recognize that combining with a company with the scale, investment grade balance sheet and operational excellence of Concho will unlock even more value for shareholders. The combined company will have the vision and necessary financial strength to efficiently develop the tremendous resource potential of these assets with large-scale projects.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In the case of RSP Permian, the news proved to be overwhelmingly positive. Not only will the company be acquired, it will be acquired at an incredible premium, making this transaction a big win for shareholders. With that said, it’s no surprise that the stock is rocketing toward the top today. Of course, our partners at Trade Ideas were the first to alert us to the gains. At the moment (10:11), RSPP is trading at $44.90 per share after a gain of $5.99 per share or 15.38% 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 RSPP. In particular, we’re interested in following the story surrounding the acquisition. While the transaction is under a definitive agreement, it is subject to customary closing conditions as well as regulatory approval. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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