On Thursday, Devon Energy (NYSE: NYSE:DVN), a prominent player in the energy sector, reportedly made an acquisition offer to Enerplus (NYSE: NYSE:ERF), a move that triggered a significant rise in Enerplus's share value on the Canadian market. The speculative nature of the offer, lacking concrete terms, was enough to push Enerplus's stock nearly 8% higher.
Stifel, a financial services firm, weighed in on the potential acquisition, suggesting that the likelihood of a deal materializing is high. Their assessment is based on the track record of accuracy in pre-deal reports across the industry over the past year. Stifel's analysis hints at a possible transaction value that could surpass $5.0 billion CAD, considering the proven developed producing (PDP) reserves and inventory in the Bakken region.
The strategic rationale behind the potential acquisition was further elaborated, with the suggestion that Devon Energy may seek a deal with little to no premium to maintain accretiveness. This approach could be influenced by Devon's current stock performance and the prevailing market conditions.
The transaction, if it were to occur within the range of $3.5 billion to $3.7 billion USD ($4.8 billion to $5.0 billion CAD), is considered by Stifel to be financially and strategically sound for Devon. The anticipated synergies from the deal, potentially exceeding $200 million USD, along with the quality of Enerplus's acreage and Devon's strategic need to deepen its inventory in the Bakken region, contribute to this outlook.
At the time of the report, Enerplus's market capitalization was just under $4 billion CAD, positioning the company as a substantial target for acquisition within the energy industry.
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