By Lisa Kerner
Charlotte, N.C., July 17 - Plains Exploration & Production Co. entered into a definitive agreement to acquire Pogo Producing Co. in a stock and cash transaction worth an estimated $3.6 billion and slated to close in the fourth quarter.
The agreement gives Pogo stockholders 0.68201 of a share of Plains common stock and $24.88 in cash for each share of Pogo common stock, or consideration of approximately $60 per share. Total consideration for outstanding Pogo shares is 40 million Plains shares and some $1.5 billion in cash.
Both companies' boards of directors approved the agreement and are recommending the transaction to their respective stockholders for approval. Pogo chairman, president and chief executive officer Paul G. Van and Third Point LLC agreed to vote their Pogo shares in favor of the merger.
Following the closing, Plains stockholders will own about 66% of the combined company and Pogo stockholders will own the remaining 34%. Plains' James C. Flores will remain the chairman, president and chief executive officer along with Plains' current executive staff. Two members of Pogo's board of directors will join the board of Plains.
Plains was advised by Lehman Brothers Inc., while Pogo was advised by Goldman, Sachs & Co. and TD Securities Inc.
"This accretive transaction represents a significant opportunity for the shareholders of both companies to benefit from the combined strengths of Plains and Pogo," Flores said in a company news release.
"Along with asset diversification and significant cost savings, the combined company will have a total estimated reserve potential of 1.4 billion barrels of oil equivalent (proved, probable and possible)."
As previously reported, Pogo agreed on May 29 to sell all of the outstanding stock of its wholly owned subsidiary, Northrock Resources Ltd., to Abu Dhabi National Energy Co. for $2 billion in cash. The transaction was one step in Pogo's strategic alternatives process to unlock unrealized value from its asset base, according to a previous release.
Plains is a Houston independent oil and gas company. Pogo, also based in Houston, is a natural gas production and exploration company.
| Acquirer: | Plains Exploration & Production Co.
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| Target: | Pogo Producing Co.
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| Transaction total: | $3.6 billion
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| Price per share: | $60.00, including 0.68201 of a Plains share and $24.88 in cash
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| Announcement date: | July 17
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| Expected closing: | Fourth quarter
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| Stock price for acquirer: | NYSE: PXP: $51.19 on July 16
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| Stock price for target: | NYSE: PPP: $50.48 on July 16
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