The jovially named Rice Energy Inc. (NYSE: RICE) has been the target of a $6.7 billion dollar acquisition by EQT Corp. (NYSE: EQT).
EQT, a natural gas producer, has been struggling to play catch up in the expanding field of natural gas, but has made a strong push towards becoming the biggest US producer of the alternative fuel. After entering in agreement, Rice Energy has jumped by 26% to nearly $25 per share, but EQT has slumped over 7% this morning.
Investors were bearish in their assessments as “Rice Energy shareholders will receive $5.30 per share in cash and 0.37 EQT shares for each share they hold,” EQT said, this represented a 37.4% premium to the stocks previous close on Friday and a $27.05 per share valuation. Rice Energy’s shares rose to $24.90 Monday morning.
The company would also acquire $1.5 billion in Rice Energy’s debt, and “EQT will also obtain Rice’s midstream assets, including a 92% interest in Rice Midstream GP Holdings LP, which owns 100% of the general partner incentive distribution rights and 28% of the limited partner interests in Rice Midstream Partners LP (NYSE: RMP), and the retained midstream assets currently held at Rice,” according to the release. The deal also allows EQT to absorb 187,000 acres in the Marcellus shale and 65,000 acres in Utica shale. “We will now shift our focus from acquisitions to integration as we work to drive higher capital efficiency through longer laterals; reduce per unit operating costs through operational and G&A synergies; improve our sales portfolio by expanding access to premium markets; and deliver increased value to our shareholders," said Steve Schlotterbeck, EQT’s President and CEO.
This deal seems to be plausible, even though it is possible it would ping some monopoly alarms, and the potential gain for EQT has been deemed “terrific’” by Jim Cramer. Should it go through, and it should, EQT is primed for new heights.