Exxon Mobil Buy XTO Energy Inc. For $41 Billion

Exxon Mobil said Monday that it has agreed to buy XTO Energy Inc., a natural gas producer, for $31 billion in stock and the assumption of $10 billion in debt, the largest energy merger in years.

Under the terms of the deal, Exxon Mobil will pay XTO Energy shareholders .7098 common shares for each of their XTO Energy shares, or about $51.69 based on Friday’s closing prices. The deal, which is taking advantage of low natural gas prices, represents a 25 percent premium for XTO Energy’s shares.

The deal would give Exxon Mobil the equivalent of about 45 trillion cubic feet of natural gas throughout the United States, in a bet that demand will continue to rise. XTO Energy, founded in 1986, is the nation’s largest domestic producer of natural gas.

“XTO Energy is a leading U.S. unconventional natural gas producer, with an outstanding resource base, strong technical expertise and highly skilled employees,” Rex Tillerson, Exxon Mobil’s chief executive, said in a statement.

Exxon Mobil’s deal has prompted speculation among analysts over which natural gas producers may be up for sale next, with companies like Devon Energy now considered potential takeover targets.

Exxon Mobil said that after the deal’s close, expected in the second quarter next year, it would keep XTO Energy as an upstream business unit to develop natural gas resources from unconventional sources like shale rock. The business will remain in XTO Energy’s headquarters in Fort Worth, Tex.

Exxon Mobil was advised by JPMorgan Chase, while XTO Energy was advised by Barclays Capital and Jefferies.
[ad#adc-1]