OKLAHOMA CITY — Continental Resources confirmed Monday that it has accepted an offer from billionaire founder Harold Hamm to take the company private at a valuation of around $27 billion.
Hamm, who originally founded Continental as Shelly Dean Oil Co. in 1967, offered $74.28 per share for the part of the company not already owned by himself and the trust Hamm family. He previously offered $70 per share in June.
Shares of the Oklahoma City-based company rose more than 8% to $74.07 in Monday afternoon trading.
Continental identifies itself as one of the top 10 independent petroleum producers in the United States. It is the largest concessionaire and producer of the nation’s premier oil field, the Bakken area of North Dakota and Montana. It is also the largest producer in the Anadarko Basin in Oklahoma, the second largest concessionaire in the Powder River Basin in Wyoming, and the 10th largest in the Permian Basin in Texas.
According to a press release, the company has formally entered into an agreement and plan to merge with Omega Acquisition Inc., an Oklahoma corporation and an entity owned by Hamm. Based on shares outstanding as of October 12, the tender offer would be for approximately 58 million common shares. The offering price includes 28 cents in lieu of Continental’s scheduled third quarter 2022 dividend. As a result, Continental will not pay dividends between signing and closing of the transaction.
Each common share outstanding immediately prior to the merger, other than shares held by holders validly claiming appraisal rights under Oklahoma law and certain other excluded shares, will be converted into the right to receive the price of the offer, without interest.
According to the release, the offer price represents a 15% premium to Continental’s common stock closing price of $64.50 on June 13, prior to the June 14 announcement of the initial Hamm family.
There are no financing conditions for the transaction. It is expected to be funded using a combination of the Company’s cash, borrowings under its existing revolving credit facility and a new term loan facility to be entered into as part of the fence.
Hamm is currently Chairman of the Board of Continental. He and the rest of the Hamm family collectively own approximately 83% of Continental’s common stock.
Continental’s board of directors, acting on the unanimous recommendation of a special committee composed of independent and disinterested directors, approved the merger agreement and recommended that Continental stockholders tender their common stock in response to the ‘offer.
The transaction does not require a vote from Continental shareholders.
Subject to satisfaction of customary conditions, the transaction is expected to close by December 31.
Intrepid Partners LLC acted as financial advisor and Vinson & Elkins acted as legal advisor to Hamm. Evercore acted as financial advisor and Wachtell, Lipton, Rosen & Katz acted as legal advisor to the Special Committee.