M&A In Energy Industry Case Solution & Answer

M&A In Energy Industry Case Solution 

About the Merger

Range Resources Corporation (RRC) and Memorial Resource Development Corporation(MRD)at May 16, 2016 announced a final merger agreement whereby Range will acquire all of MRD’s issued common stock in a total shareholder transaction of 4.4 billion dollars. The valuation includes MRD’s hypothetical net debt, which was 1.1 billion dollars as of 31 March, 2016(Range Resources Corporation, 2016).

Jeff Ventura, CEO of Range, said: “This is an exciting advertisement that combines two high-quality, unconventional manufacturers and large, high-risk, high-return projects in one portfolio. This acquisition allows Offering better marketing capabilities and opportunities in the Gulf of Mexico and more favorable exposure to growing demand for natural gas, the transaction has also increased cash flow and strengthened Our improved credit profile and overall investment portfolio Secure and efficient operating systems we can add to our business, strengthening one of the best global technical teams in the industry. We believe this combination will create significant value for our existing and new shareholders.”

Jay Graham, CEO of MRD, said: “This transaction combines two complementary companies with high-paying portfolio assets in two major sets of unconventional resources. Our strong asset base and total capital cash flow for our shareholders to benefit from the combined assets. I believe the team; strong balance sheet and core assets will be fully prepared for further success and shareholder value creation.”

For each MRD Ordinary Share held, the shareholders of MRD will receive 0.375 shares of the Range Resources Corporation (RRC) Share. Based on the adjusted closing price (Adj. Close) of the Range on 13 May, 2016, the implicit transaction value of the shareholders of MRD is 15.75 dollars per share, representing a premium of 17% of the closing share price by MRD. Upon completion of the transaction, MRD has the right to appoint independent MRD directors as members of the Range’s Board of Directors. The two boards unanimously approved the terms of the agreement. The transaction is closed in the second half of 2016 after normal approval.

Perceived Value Driver

Range Resources Corp. Completes Acquisition of Memorial Resource Development Corp. September 16. The original transaction was worth $ 4.4 billion, including Memorial’s assumption of $ 1.1 billion in net debt, but the two companies now claim the transaction is worth $ 4.2 billion. billion, including debt(Range Resources Corporation, 2016).

“The merger of the two leading U.S. quality natural gas companies provides a solid foundation for Range to create sustainable shareholder value, and our large, region-wide drilling stock allows us to further improve our structure. already to drive costs and further improve operational and marketing efficiencies,” said Jeff Ventura, CEO of Range in a Sept. 16, 2016 statement. “We welcome new members of the Range team in Houston and Northern Louisiana who share our values ​​and commitment to being good shareholder managers while contributing to our environment and communities. Where we live and work.”…………………

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