Southwestern Energy Company entered into a definitive merger agreement to acquire Montage Resources Corporation (NYSE:MR) from EnCap Energy Capital Fund VIII, L.P. and EnCap Energy Capital Fund IX, L.P. managed by EnCap Investments, L.P., Travis Peak Resources, LLC, Silver Point Capital L.P. and others for approximately $210 million.
The transaction is subject to various closing conditions, including, but not limited to, the approval of the merger agreement by the holders of a majority of the outstanding Montage Resources Corporation, the expiration or earlier termination of the waiting period under the HartScottRodino Antitrust Improvements Act of 1976, as amended, the Securities and Exchange Commission having declared effective Southwestern's Registration Statement on Form S-4 filed in connection with the transaction and Southwestern Energy common stock to be issued upon the merger shall have been approved for listing on the NYSE Stock Exchange subject to official notice of issuance. The Boards of Directors of Southwestern Energy have approved the transaction. The Boards of Directors of Montage have unanimously approved the transaction. Southwestern Energy has entered into a support agreement with stockholders representing approximately 39% of Montage's outstanding common stock. EnCap Investments has agreed to vote its 39% stake in favor of the transaction. As of September 9, 2020, Federal Trade Commission granted the early termination notice for the transaction. As of October 2, 2020, Montage announced it will hold a special meeting of shareholders on November 12, 2020 to approve the transaction. The registration statement was declared effective by the SEC on October 6, 2020. As of October 8, 2020, Southwestern Energy Company announced that its borrowing base was reaffirmed at $1.8 billion during its fall semi-annual redetermination. Additionally, upon the close of the transaction, the Company's borrowing base and bank commitments will increase to $2.0 billion, with asset coverage exceeding the Company's borrowing base level. On November 12, 2020, the special meeting of Montage Resources stockholders approved the transaction. The transaction is expected to close in the fourth quarter of 2020. The transaction is expected to be accretive to per share financial metrics as well as leverage, margin and returns of Southwestern Energy. The transaction will be accretive to the shareholders of both Southwestern Energy and Montage Resources.
Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC acted as financial advisors, while Frank Bayouth, Alec Jarvis, Elizabeth Malone, Timothy F. Nelson, Eric Otness, Erica Schohn, David Schwartz and Kenneth Schwartz of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors to Southwestern Energy. Barclays acted as financial advisor and fairness opinion provider, and Bryn A. Sappington, Trevor G. Pinkerton, Todd Schroeder, Alex Clark and Ryan Searfoorce of Norton Rose Fulbright US LLP acted as legal advisors to Montage Resources. W. Matthew Strock, Stephen M. Gill, John Lynch, David D'Alessandro and Regina Ibarra of Vinson & Elkins LLP acted as legal advisors to EnCap Investments, L.P. Cleary Gottlieb Steen & Hamilton LLP acted as the legal advisor to Goldman Sachs in the transaction. Computershare Trust Company N.A. acted as transfer agent and registrar to Southwestern and Montage. Montage paid Barclays $1 million upon the delivery of Barclays' opinion and a compensation of approximately $8 million will be payable on completion of the transaction against which the amounts paid for the opinion will be credited. Melissa Sawyer of Sullivan & Cromwell LLP acted as legal advisor to Barclays Capital Inc