Denbury Resources Shares Tumble On Encore Deal
NEW YORK (AP) ¿ Shares of Denbury Resources Inc. tumbled Monday, a day after the oil and gas producer said it will acquire Encore Acquisition Co. for $2.64 billion in cash and stock while selling off assets to slash its debt and issuing new shares to help fund the purchase.
Denbury shares fell $1.44, or 9.9 percent, to $13.16 in afternoon trading, while Encore shares rose $7.96, or 21 percent, to $45.03.
To help fund the deal, Denbury expects to issue up to 146 million shares of common stock, which would boost its total shares outstanding to between 364.4 million and 395.4 million and potentially dilute its share price. The company also plans to sell about $500 million in noncore properties in 2010 in an effort to reduce debt.
Encore shareholders will get $50 for each share held, including $15 in cash and $35 in stock ¿ a 35 percent premium to Encore's Friday closing price of $37.07.Despite the premium, Mitchell Wurschmidt, an analyst with KeyBanc Capital Markets, said the price is fair.
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