Q: Txsfor u great view to my Q on ERF on Feb 5.After market close today announcement that Chord is acquring ERF and it rose close to 10% on its US listed shares in after hours. Devon was the rumored suitor in early Feb.Please comment and advise me what to do,Reports Q on Feb 22 after close.Txs for u usual great services & views
5i Research Answer:
It is a frienly cash and stock deal, valued at a 19% premium. But the value will now vary with the price of CHRD shares. It is interesting in that perhaps CHRD swooped in while Devon was thinking about it. As far as deals go it is not so hot: the premium is low and it is not all cash. Devon is a much larger company than CHRD and it it wants ERF it likely could top this bid. The ERF dividend will continue until closing (ratio adjusted with a final dividend). The deal looks fine from CHRD's perspective, with a larger, more diversified combined company with good synergies. We would hold here. This one may not be over.