Chesapeake Energy Corporation (NasdaqGS:CHK) entered into a definitive agreement to acquire Vine Energy Inc. (NYSE:VEI) from Funds managed by The Blackstone Group Inc. and Others for $1.1 billion on August 10, 2021. The acquisition is a zero premium transaction valued at approximately $2.2 billion. Under the terms of the merger agreement, Vine shareholders will receive a fixed exchange ratio of 0.2486 Chesapeake shares of common stock and $1.20 of cash for each share of Vine common stock owned. Upon closing, Chesapeake shareholders will own approximately 86% and Vine shareholders will own approximately 14% of the fully diluted shares of the combined company. Following completion of the transaction, Chesapeake expects to raise its base dividend by 27% to $1.75 per share as a result of the significant increase in free cash flow which reaches approximately $6 billion over the next five years. Upon termination of the agreement under specified circumstances, including the termination by the Chesapeake in the event of a change of recommendation by the board of directors of Vine, Vine would be required to pay the Chesapeake a termination fee of $45 million.

The transaction is subject to customary closing conditions, including certain regulatory approvals, antitrust approvals, registration statement effectiveness, listing/approvals of new shares on stock exchange, and the approval of Vine shareholders. Funds managed by The Blackstone Group Inc. own approximately 70% of outstanding shares of Vine common stock and have entered into a support agreement to vote in favor of the transaction. The Board of Directors of Chesapeake Energy Corporation and Vine Energy unanimously approved the transaction, The transaction is expected to close in the fourth quarter of 2021. J.P. Morgan Securities LLC is serving as financial advisor, William N. Finnegan, Bill Finnegan, Kevin Richardson, Michael King, Tim Fenn, Jim Cole, Adam Kestenbaum, Joel Mack, Joshua Marnitz, Craig Kornreich, Natalie McFarland and Jason Cruise of Latham & Watkins LLP and Richards, Layton & Finger, P.A. are serving as legal advisors and DrivePath Advisors is serving as communications advisor to Chesapeake. Citigroup Inc. (NYSE:C) is serving as lead financial advisor and Andrew Calder, Douglas E. Bacon, William J. Benitez, Michael Rigdon, Andy Veit, Mark Dundon, Rob Fowler, and Rahul Vashi of Kirkland & Ellis LLP serving as legal advisors to Vine. Raymond Gietz, Jeffrey Malonson, Vadim Brusser and Devon Bodoh of Weil, Gotshal & Manges LLP is serving as legal advisors to Blackstone. Houlihan Lokey, Inc. (NYSE:HLI) served as a financial advisor to the Vine Board of Directors and as fairness opinion provider to Vine Energy. Sullivan & Cromwell LLP represents Houlihan Lokey as financial advisor to Vine Energy Inc. D.F. King & Co., Inc. acted as an information agent to Vine Energy and will receive a fee of $14,500 for its services. Houlihan Lokey will receive a fee of $3 million for its services.

Chesapeake Energy Corporation (NasdaqGS:CHK) completed the acquisition of Vine Energy Inc. (NYSE:VEI) from Funds managed by The Blackstone Group Inc. and Others on November 1, 2021. Also effective as of the effective time, each of Eric Marsh, President, Chief Executive Officer and Chairman of Vine's Board of Directors, Wayne Stoltenberg, Executive Vice President and Chief Financial Officer and David Elkin, Executive Vice President and Chief Operating Officer, resigned as an officer of Vine. The transaction has been approved by the shareholders of Vine Energy.