Bill Barrett Corporation's Stock Plunges After Announcing Merger Agreement
Bill Barrett Corporation (NYSE: BBG) plunged on Wednesday and was down more than 18% at 11:00 a.m. EST. Driving the downdraft was the announcement that the DJ Basin-focused driller had agreed to combine with Fifth Creek Energy and that it would issue stock to pay down debt as well as finance future drilling activities.
Bill Barrett Corporation agreed to a strategic business combination with Fifth Creek Energy in a transaction valued at $649 million. Under the terms of the deal, each company will become subsidiaries of a new publicly listed company. Bill Barrett investors will exchange their current shares on a 1-for-1 basis with the new entity while Fifth Creek's private equity owner will receive 100 million shares in the new company. The deal will combine two drillers that have highly adjacent acreage positions, which will enable them to drill longer, higher-returning wells.
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Source: Fool.com
