By Lisa Kerner
Charlotte, N.C., Sept. 30 - Resaca Exploitation, Inc. and Cano Petroleum, Inc. announced they agreed to merge in a tax-free, stock-for-stock exchange valued at $1.67 per Cano share, or a total of $76 million.
Cano shareholders will receive 2.1 shares of Resaca common stock for every share of Cano common stock, giving them ownership of approximately 50% of the combined company.
The combined company will operate under the Resaca name out of Houston, according to the companies' news release.
Current Resaca chairman J.P. Bryan will become chief executive officer of the combined company.
Four directors from the Resaca board of directors and three from the Cano board will form the combined company's board.
"Resaca's near-term production growth potential and synergies will add the cash flows needed for all shareholders to realize the long-term upside of both companies' assets," Cano chairman and CEO Jeff Johnson said in the release.
The transaction is expected to close in the next three to five months subject to shareholder approval, Resaca becoming listed on the New York Stock Exchange, refinancing of existing bank debt and other customary closing conditions.
Resaca will continue to trade on AIM Market of the London Stock Exchange.
Cano, a Fort Worth independent energy producer, is being advised by RBC Capital Markets Corp., and its legal counsel is Thompson & Knight LLP.
SMH Capital Inc. and Haynes and Boone, LLP advised Resaca, an independent oil and gas development and production company based in Houston.
| Acquirer: | Resaca Exploitation, Inc.
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| Target: | Cano Petroleum, Inc.
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| Announcement date: | Sept. 30
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| Price per share: | 2.1 Resaca shares
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| Expected closing: | Three to five months
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| Stock price for target: | NYSE Amex: CFW: $0.91 on Sept. 29
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