Parsley Energy, Inc. (NYSE:PE) entered into a definitive merger agreement to acquire Jagged Peak Energy Inc. (NYSE:JAG) from Quantum Energy Partners and others for $1.7 billion on October 14, 2019. Under the terms of the agreement, Parsley Energy will issue 0.447 Parsley Energy Class A shares for each share of Jagged Peak Energy. The transaction is valued at approximately $2.27 billion, including Jagged Peak's net debt of approximately $625 million as of June 30, 2019. Upon closing, Parsley shareholders will own approximately 77% of the combined company and Jagged Peak shareholders will own approximately 23% of the combined company. In case of termination of the transaction, Parsley will pay Jagged Peak a termination fee of $189.035 million and Jagged Peak will pay Parsley a termination fee of $57.435 million. Parsley's board of directors will be expanded to eleven Directors to include two members from the current Jagged Peak Board of Directors. The combined company will be led by Parsley's executive management team and will remain headquartered in Austin, Texas.

The transaction is subject to customary closing conditions and regulatory approvals, the expiration or termination of the waiting period under the Hart-Scott-Rodino Act, registration statement effectiveness (S-4/F-4), listing/ approval of new shares on stock exchange, and the approval by shareholders of Parsley Energy and Jagged Peak Energy. Quantum Energy Partners, has committed to vote its shares in favor of the transaction. The transaction has been unanimously approved by the Boards of Parsley Energy and Jagged Peak Energy and the Board of Parsley Energy and Jagged Peak Energy have recommended their respective shareholders to vote in favor of the transaction. As of November 13, 2019, early termination of antitrust approval waiting period was obtained from Federal Trade Commission. As of January 9, 2020, Parsley Energy shareholders approved the merger at the special meeting. The transaction is expected to close during the first quarter of 2020. As of January 9, 2019, the transaction is expected to close on January 10, 2020. Parsley expects the low-premium transaction to be immediately accretive to key metrics in 2020, including cash flow per share, free cash flow per share, cash return on capital invested, and net asset value.

Maynard Holt, Travis Nichols, Paul Perea and Eric Marshall of Tudor Pickering Holt & Co. Advisors LP acted as financial advisor and Sean T. Wheeler, Julian Seiguer, Michael W. Rigdon, Doug Bacon and Kim Hicks of Kirkland & Ellis LLP acted as legal advisor for Parsley Energy. Chris Miller and Serge Tismen of Citigroup Global Markets Inc. and Hank Hilliard of RBC Capital Markets, LLC acted as financial advisors for Jagged Peak and Douglas E. McWilliams, Stephen M. Gill, Shane Tucker, Dario Mendoza, John Lynch, Sean Becker, Hill Wellford, Guy Gribov, Michael Holmes and Craig Zieminski of Vinson & Elkins L.L.P. acted as legal advisors for Jagged Peak. RBC Capital Markets, LLC acted as fairness opinion provider to Jagged Peak. Morrow & Co., LLC acted as the information agent to Parsley Energy and will receive a fee of $25,000 for its services. Jagged Peak will pay RBC Capital Markets, LLC $1 million upon the delivery of its written opinion in connection with the merger, approximately $5 million paid upon the closing of the merger, against which the fee RBC received for delivery of its opinion will be credited and an additional fee of $1 million payable, at Jagged Peak's sole discretion. Tudor became entitled to receive an opinion fee from Parsley of $2 million, which will be credited against the transaction fee of $15 million payable to Tudor upon the consummation of the transaction. Jagged Peak has agreed to pay Citi for its services in connection with the transaction an aggregate fee of up to $16 million, of which a portion was payable upon delivery of Citi's opinion and up to $14.5 million is payable contingent upon consummation of the merger. American Stock Transfer & Trust Company, LLC acted as the transfer agent to Parsley. Computershare Trust Company, N.A. acted as the transfer agent to Jagged Peak Energy.