By Lisa Kerner
Charlotte, N.C., Oct. 31 - Penn West Energy Trust and Canetic Resources Trust agreed to a strategic combination to "form Canada's flagship energy trust" with an enterprise value in excess of C$15 billion. Following the transaction's close in mid-January, the combined trust will operate under the Penn West name.
The companies' agreement calls for Canetic unitholders to receive 0.515 of a Penn West unit for each Canetic unit on a tax-deferred basis for Canadian and U.S. tax purposes, a company news release stated.
In addition, a one-time special distribution of $0.09 per unit will be paid to Canetic unitholders.
Total consideration per unit is valued at C$15.84.
A $125 million non-completion fee payable by either Penn West or Canetic is included in the agreement.
"We are bringing together two great organizations with world-class assets and people to create an aggressive Canadian player in the global markets," Penn West president and chief executive officer William E. Andrew said in the release. "The combined trust will be well positioned to compete in North America and internationally."
Canetic president and CEO J. Paul Charron noted that the combination of the two companies is more than the sum of its parts.
"This strategic combination brings together two organizations with complementary strategies, asset bases and management teams resulting in a strong shared future," Charron added.
Andrew will lead the combined trust as CEO and Charron will be president.
Penn West plans to complete its previously announced acquisition of Vault Energy Trust while Canetic intends to complete its previously announced acquisition of Titan Exploration Ltd.
Scotia Waterous provided a fairness opinion to Penn West and advised the company on the Canetic transaction. Strategic advisors to Penn West are CIBC World Markets Inc. and RBC Capital Markets.
Canetic was advised and given a fairness opinion by BMO Capital Markets and TD Securities Inc.
Penn West, an oil and natural gas energy trust, and Canetic, an oil and gas energy trust, are both based in Calgary, Alta.
| Acquirer: | Penn West Energy Trust
|
| Target: | Canetic Resources Trust
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| Announced: | Oct. 31
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| Transaction total: | C$15 billion
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| Price per share: | C$15.84
|
| Termination fee: | $125 million
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| Expected closing: | Mid-January 2008
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| Stock price of acquirer: | NYSE: PWE: $32.21 on Oct. 30
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| Stock price of target: | NYSE: CNE: $15.53 on Oct. 30
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