Following the transaction, shareholders of MRD are expected to own approximately 31% of the outstanding shares of Range
FORT WORTH, Texas – Range Resources Corporation and Memorial Resource Development Corp.(MRD) have announced a merger agreement under which Range will acquire all of the outstanding shares of common stock of MRD in an all-stock transaction valued at $4.4 billion.
This valuation includes the assumption of MRD’s net debt, which was $1.1 billion as of March 31, 2016.
“This is an exciting announcement that brings together two high-quality unconventional producers with large de-risked, high-return projects into one portfolio,” said Jeff Ventura, Range’s CEO.
Ventura says the acquisition will give Range strategic positioning in both the Appalachian and Gulf Coast regions, providing greater marketing capabilities and opportunities, with added beneficial exposure to growing natural gas demand.
“The transaction is also accretive to our cash flow, bolsters our credit profile and enhances the overall portfolio,” he said.
“Like Range, the MRD team has a strong culture and track record of safe and efficient operations. We look forward to adding their talents and capabilities to our company, strengthening one of the top overall technical teams in the industry. We believe this combination will create significant value for our existing and new shareholders,”
Under the definitive agreement, MRD shareholders will receive 0.375 shares of Range common stock for each share of MRD common stock held.
Based on the Range closing price on May 13, 2016, the transaction has an implied value to MRD shareholders of $15.75 per share, representing a 17 per cent premium to the closing price of MRD stock.
“This transaction combines two complementary companies with a deep, stacked pay portfolio of assets in two leading unconventional resource basins. The cash flow from our strong asset base and the all-stock nature of the transaction will allow our shareholders to benefit from the combined assets. I am confident the combined team, strong balance sheet and premier assets are well-positioned for further success and shareholder value creation,” said Jay Graham, MRD’s CEO.
Following the transaction, shareholders of MRD are expected to own approximately 31 per cent of the outstanding shares of Range.
MRD will have the right to nominate an independent director from MRD to a seat on Range’s Board.
The Boards of Directors of both companies have unanimously approved the terms of the agreement, and have recommended that both shareholder groups approve the transaction.
Completion of the transaction is subject to the approval of the respective companies’ shareholders, certain regulatory approvals and customary closing conditions.
The transaction is expected to close in the second half of 2016.