George S. May Business Blog

Denbury will buy Encore Acquisition

Denbury Resources Inc has agreed to buy Encore Acquisition Co for $4.5 billion. The deal, expected to close the first quarter of next year, will jolt Denbury into one of N. America’s largest oil production and exploration companies. JPMorgan Chase served as Denbury’s banker in the negotiations.

Encore shareholders will be paid $50 per share, which represents a premium of 35 percent for Encore shareholders based on its Friday close. The amount will be paid by way of $15 in cash and $35 in Denbury common stock.

Bob Reeves, Encore’s CFO, estimated the transaction was worth about $2.64 billion, based on Encore’s 52.8 million common shares outstanding at July 31.

Denbury intends to issue between 115 million and 146 million shares of common stock to fund the equity portion of the deal.

The sale is expected to garner an estimated $500 million, which will be used to pay down its own debt.

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