Callon + Carrizo merger update - Sept 9

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Callon + Carrizo merger update - Sept 9

Post by dan_s »

This is going to get interesting

Sept 9 (Reuters) - Billionaire investor John Paulson's hedge fund on Monday opposed Callon Petroleum Co's proposed $3.2 billion acquisition of Carrizo Oil & Gas Inc, and urged the company to instead consider selling itself.

Paulson & Co. Inc, which has a 9.5% stake in Callon, in a letter to the company's board said adding Carrizo's "inferior Eagle Ford assets will permanently reduce the attractiveness of Callon to potential acquirers".

Callon offered Carrizo shareholders 2.05 shares for each Carrizo share held, or about $13.12 per Carrizo share based on Callon's closing share price on July 12, representing a 25% premium.

Paulson noted that paying a 25% premium for the acquisition is "unjustifiable" and said Callon will lose its premium valuation as a Permian pure play.

"If the board is truly interested in its shareholders, given the magnitude of the difference between the current stock price of Callon and its takeover value, it should pursue a sale of Callon," the hedge fund said.

Shares of Callon, which have dived 36.25% since the transaction was announced, were up ~10.3% at $4.50 in premarket trading.
Dan Steffens
Energy Prospectus Group
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