Diamondback Energy may tap junk market in fourth quarter for $9.2 billion Energen acquisition

By Paul A. Harris

Portland, Ore., Oct. 9 – Diamondback Energy, Inc.'s $9.2 billion acquisition of Energen Corp. is expected to generate new money bonds in the high-yield primary, likely in the run-up to the new year, a buyside source said.

The price includes Energen’s net debt of $830 million as of June 30, 2018.

The transaction, which is expected to be completed by the end of the fourth quarter of 2018, is subject to the approval of both Diamondback and Energen shareholders.

The transaction was unanimously approved by the boards of directors of each company.

The combination is expected to result in a lower cost of capital and an accelerated path to an investment-grade credit profile.

Upon closing, Diamondback’s board of directors and executive team will remain unchanged. Additionally, the company will continue to be based in Midland, Texas.

Citigroup Global Markets Inc. is acting as exclusive financial adviser to Diamondback. J.P. Morgan Securities LLC and Tudor Pickering Holt & Co are acting as exclusive financial advisers to Energen.

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