Crescent Point Energy Corp., the most acquisitive company in Canada’s oil and gas industry in past years, plans to buy Legacy Oil + Gas Inc. for C$563 million ($453 million) in shares.
The agreement also includes the assumption of C$967 million in debt, valuing the deal at C$1.53 billion, Crescent Point said in a statement. The offer represents a 2.4 percent discount over Legacy’s closing price on Tuesday.
The purchase is the first for Calgary-based Crescent Point since oil prices collapsed by half last year, after Chief Executive Officer Scott Saxberg spent months weighing opportunities. FrontFour Capital Group, an activist shareholder of Legacy, had been pushing for a sale and the ouster of CEO Trent Yanko as the oil producer struggles with debt, people familiar with the matter said last month.
“The Legacy acquisition is aligned with our strategy of acquiring large oil-in-place pools with low current recovery factors,” Saxberg said in the company’s statement.
The purchase gives Crescent Point production of about 22,000 barrels of oil equivalent a day, mostly in priority regions for the company in southeast Saskatchewan, Manitoba and North Dakota. Crescent Point will finance the purchase by selling C$600 million of shares through a syndicate of banks in a so-called bought deal.
“While we are pleased that we were able to drive change in this instance and help create value for all shareholders, we believe that an even better result could easily be achievable,” FrontFour co-founder and portfolio manager Zachary George said in an e-mailed statement. George is the son of former Suncor Energy Inc. Chief Executive Officer Rick George.
Legacy’s directors and officers and some funds managed by KERN Partners have agreed with Crescent Point to vote in favor of the deal, which requires approval from two-thirds of shareholders, Legacy said. FrontFour’s George declined to say how his fund will vote.
Crescent Point will pay about C$2.85 per Legacy share based on the buyer’s closing price of C$30 on May 25, representing a 4.6 percent premium over the 30-day weighted average price, Legacy said in a separate statement. Legacy fell 3.3 percent to C$2.92 in Toronto on Tuesday before the deal was announced.
Bank of Montreal’s BMO Capital Markets unit advised Crescent Point on the deal and Macquarie Group Ltd.’s Macquarie Capital Markets Canada advised Legacy.