Under the terms of the agreement, Jagged Peak shareholders will receive a fixed exchange ratio of 0.447 shares of Parsley Class A common stock for each share of Jagged Peak common stock, Kallanish Energy reports.
This represents $7.59 per Jagged Peak share based on Parsley’s closing price on Oct. 11, and a premium of 1.5% compared to Jagged Peak’s 30-day volume weighted average price and 11.2% compared to Jagged Peak’s closing price on Oct. 11.
“The combination of Parsley and Jagged Peak is a natural fit,” said Matt Gallagher, Parsley’s president and CEO. “Jagged Peak’s oily, high-margin asset base slots in nicely to our returns-focused development approach, its acreage footprint and water infrastructure dovetails into our legacy Delaware Basin position, and its corporate culture aligns with our core values.”
Parsley is familiar with Jagged Peak’s Delaware Basin assets, with the majority of the acreage directly offsetting Parsley’s legacy position. Furthermore, Jagged Peak’s high-margin, oil-weighted asset base will integrate smoothly into Parsley’s near-term development program.
On a pro forma basis, Parsley will have approximately 267,000 net acres in the Permian, comprised of 147,000 net acres in the Midland Basin and 120,000 net acres in the Delaware Basin.
Following the close of the transaction, Parsley shareholders will own roughly 77% of the combined company, and Jagged Peak shareholders will own approximately 23% of the combined company.
Upon closing, Parsley’s board of directors will be expanded to 11 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.
Jagged Peak’s controlling shareholder, Quantum Energy Partners, which owns roughly 68% of the outstanding voting shares of Jagged Peak, has committed to vote its shares in favor of the transaction.
Tudor, Pickering, Holt & Co is serving as financial advisor to Parsley and Kirkland & Ellis LLP is acting as Parsley’s legal counsel.
Citibank and RBC Capital Markets are serving as financial advisors to Jagged Peak and Vinson & Elkins L.L.P. is acting as Jagged Peak’s legal counsel.