Newspaper article THE JOURNAL RECORD

Chesapeake Energy Offers to Buy Canaan Energy

Newspaper article THE JOURNAL RECORD

Chesapeake Energy Offers to Buy Canaan Energy

Article excerpt

OKLAHOMA CITY (JR) - Chesapeake Energy on Monday made an offer to buy Canaan Energy for $12 per share.
Chesapeake said in a letter delivered to the board of directors of Canaan that it plans to start a tender offer within the next few days for all shares of common stock. Both companies are based in Oklahoma City.
In Nasdaq trading on Monday, Canaan was down 60 cents, or 6.15 percent, to close at $9.15. Chesapeake was up 18 cents to $7 on the New York Stock Exchange. Chesapeake's offer was announced after markets closed on Monday.
In the letter, Chesapeake told Canaan's directors that it would prefer to negotiate a mutually acceptable business combination, but that previous refusals by Canaan's management to share Chesapeake's previous offers with its shareholders have compelled Chesapeake to go directly to shareholders.
The $12 offer price represents a purchase price of $55 million plus the assumption of Canaan's debt, which was $42 million as of Dec. 31, according to Chesapeake.
The price offered by Chesapeake represents a 31 percent premium over the closing price of $9.15 on Monday and a 58 percent premium over Canaan's closing stock price of $7.60 on Nov. 26, the last trading day before Canaan's public announcement of Chesapeake's interest in acquiring Canaan, according to Chesapeake.
"We believe that any further attempts to discuss business combination possibilities with Canaan's management will be pointless, unless Canaan's shareholders can be made aware of Chesapeake's proposal," said Aubrey K. McClendon, chairman and CEO of Chesapeake. "We are sending that message today with our proposed premium offer of $12 per share in cash."
McClendon said the offer provides Canaan shareholders with the opportunity to realize significant value and liquidity.
"We believe that our current proposal is generous to Canaan shareholders," he said. "We hope that Canaan's management will not deny Canaan's shareholders the opportunity to consider Chesapeake's proposal as an alternative to management's business plan, a plan that has to date only eroded shareholder value through poor operating and financial performance. …

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