ConocoPhillips (NYSE: COP) and Concho Resources (NYSE: CXO) reported entry into a definitive agreement to merge both companies in an all-stock transaction. The transaction has been unanimously approved by the board of directors of each company as each shares of Concho Resources common stick will exchange for a fixed ratio of 1.46 shares of ConocoPhillips common stock or a 15% premium to closing share value on October 13th. The new entity will be worth an enterprise value of approximately USD 60 Billion to offer stakeholders an optimal investment choice for sustainable performance.
“The leadership and boards of both companies believe today’s transaction is an affirmation of our commitment to lead a structural change for our vital industry,” said Ryan Lance, ConocoPhillips chairman and chief executive officer. “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. 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.”
“Through this combination, we are joining a diversified energy company with even more scale and resources to create shareholder value in today’s markets and beyond,” said Tim Leach, chairman and chief executive officer of Concho Resources. “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. 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. 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.”
The transaction is expected to close in the first quarter of 2021 as an integration planning team is being formed by representatives by both companies.