Tourmaline Oil Corp. to Acquire Crew Energy Inc. in $1.3B Deal

Tourmaline Oil Corp. Acquires Crew Energy Inc. in C$1.3 Billion All-Stock Deal

Tourmaline Oil Corp. is poised to acquire Crew Energy Inc. in a significant move valued at C$1.3 billion ($947 million), aimed at enhancing its gas production in anticipation of expected higher demand. The all-stock deal, disclosed on Monday, proposes a substantial premium for Crew shareholders, with each Crew share being exchanged for 0.114802 Tourmaline shares. The transaction value amounts to approximately C$6.69 per share, reflecting a 72% premium compared to Crew’s last closing price. Alongside this, Tourmaline will absorb C$240 million in net debt from Crew, bolstering its position in the Canadian gas market in preparation for increased demand from both power generation and export sectors.

Key Takeaways

• Tourmaline Oil Corp. acquires Crew Energy Inc. for C$1.3 billion in an all-stock deal.
• The transaction values Crew Energy at C$6.69 per share, a 72% premium.
• Crew shareholders to receive 0.114802 Tourmaline shares per Crew share.
• Deal includes assumption of C$240 million in net debt by Tourmaline.
• Acquisition aims to boost production in anticipation of rising gas demand.

Analysis

The acquisition of Crew Energy by Tourmaline Oil Corp. aims to capitalize on rising gas demand, driven by both domestic and export markets. This move enhances Tourmaline's market position and operational scale, while Crew shareholders benefit from a substantial premium. The assumption of C$240 million in net debt by Tourmaline indicates a strategic commitment to expanding its asset base. Short-term impacts include immediate market consolidation and financial strain for Tourmaline. Long-term, this deal positions Tourmaline to benefit from sustained high gas prices and increased market share, potentially reshaping the Canadian gas sector's competitive landscape.

Did You Know?

• All-Stock Deal:

  • An all-stock deal is a type of corporate acquisition where the acquiring company uses its own stock to pay for the shares of the target company. In this case, Tourmaline Oil Corp. is acquiring Crew Energy Inc. by exchanging its own shares for Crew's shares, rather than using cash. This method can be advantageous for the acquiring company as it preserves its cash reserves and can be tax-efficient.

• Premium in Acquisition:

  • A premium in acquisition refers to the amount by which the purchase price of a company exceeds its market value. In this deal, Crew Energy Inc. is being acquired at a price of C$6.69 per share, which is a 72% premium over Crew’s last closing price. This premium indicates that Tourmaline is willing to pay a higher price than the current market value, often to incentivize shareholders to sell their shares and to reflect the strategic value of the acquisition.

• Assumption of Net Debt:

  • Assumption of net debt in a corporate acquisition means that the acquiring company takes on the debt obligations of the target company. In this transaction, Tourmaline Oil Corp. is assuming C$240 million in net debt from Crew Energy Inc. This inclusion of debt in the deal terms can affect the overall valuation and financial structure of the acquiring company, potentially impacting its credit rating and financial leverage.