Diamondback Energy and Endeavor Energy Resources to Merge in $26B Deal
Diamondback Energy, Inc. and Endeavor Energy Resources, L.P. have announced a merger agreement worth approximately $26B, including Endeavor’s net debt. The deal is set to close in the fourth quarter of 2024 and will establish a dominant independent operator in the Permian Basin.
Diamondback will acquire Endeavor through a combination of stock and cash, offering approximately 117.3 million shares of Diamondback common stock and $8B in cash.
Following the merger, Diamondback stockholders will possess about 60.5% ownership of the combined entity, while Endeavor equity holders will have the remaining stake. The proposed merger is not dependent on financing and is subject to customary conditions, including regulatory approval and the approval of Diamondback’s stockholders.
This merger aims to optimize capital allocation and generate substantial financial benefits, ultimately delivering value to shareholders. Once finalized, the merged company will manage roughly 838,000 net acres and have a net production of 816 MBOE/d. The anticipated annual synergies of $550M could potentially yield over $3.0B in NPV10 over the next ten years.
As part of the merger announcement, Diamondback also revealed a 7% increase in its base dividend to $3.60 per share each year. Moreover, Endeavor’s leadership will contribute members to Diamondback’s Board of Directors, ushering in a fresh approach to capital allocation philosophy.
Overall, this merger is expected to position Diamondback Energy as a leading player in the Permian Basin, offering enhanced capital allocation strategies and significant value creation opportunities for its stakeholders.
Analyst comment
Positive news: The merger between Diamondback Energy, Inc. and Endeavor Energy Resources, L.P. is expected to have a positive impact on the market. The merger will establish a dominant independent operator in the Permian Basin, optimize capital allocation, and generate substantial financial benefits. Diamondback stockholders will own the majority of the combined entity and the merger is not dependent on financing. The merged company will manage a significant amount of acreage and have significant net production. The anticipated synergies and increased base dividend announcement further add to the positive outlook. Overall, this merger is expected to position Diamondback Energy as a leading player in the Permian Basin and create value for its stakeholders.
