CPE stock is in the green on Friday after Callon Petroleum (NYSE:CPE) slashed its takeover deal of Carrizo Oil & Gas (NASDAQ:CRZO) in a last-ditch attempt to get the takeover over the line.
CPE Stock Down 40%
Callon Petroleum has been involved in a hotly disputed attempted takeover of the rival shale firm, with a group of its own investors led by major shareholder John Paulson and proxy advisory firms Glass Lewis & Co and Institutional Shareholder Services opposing the deal and instead arguing that the company should place itself on the market. A shareholder vote was due to take place yesterday, November 14, but was scrapped at the last minute as Callon put forward a revised deal. CPE shares are down over 40% since the deal was first announced.
The revised deal has seen Callon Petroleum cut its offer from $1.2 billion USD in July to $723 million USD. The new terms represent a 7% premium on the CRZO trading price, a sharp drop from the initial offer of 25%. It would leave Callon shareholders with 58% of the combined company, up from the original 54%. A rescheduled shareholder vote will now take place on December 20 in what is widely believed to be the make or break moment for the deal. CPE stock has gained 5% today in light of the revised offer.
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Crunch Vote
“In light of today’s market environment, the revised terms offer compelling near- and long-term value for Carrizo shareholders,” Chip Johnson, Carrizo Chief Executive, said in a statement. Under the new terms of the deal, Carrizo shareholders will receive 1.75 of CPE shares for each share held, down about 15% from the previous offer of 2.05 Callon shares. Callon Petroleum also agreed to pay up to $10 million worth of Carrizo’s expenses if Callon shareholders reject the deal.
John Paulson is the largest shareholder in Callon, owning 9.5% of CPE stock, and while he opposed the initial deal, it is as of yet unclear if the new offer has changed his position. Meanwhile, management only owns a 0.5% stake in the firm, and so, a significant amount of the voting power lies in Paulson’s hands. So, it’s all eyes on December 20.
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