PanCanadian and Alberta to Form Energy Powerhouse

In a deal creating the world's largest independent oil and natural gas exploration and production company, PanCanadian Energy (PCX Quote) agreed Sunday to acquire Alberta Energy (AOG Quote) for $6.57 billion in stock.

Billed as a "merger of equals" by both Calgary-based parties, Alberta Energy shareholders will receive 1.472 shares of PanCanadian for each share of Alberta they own. Upon closing, PanCanadian shareholders will own 54% of the new company, to be named EnCana. PanCanadian will also assume nearly $3 billion in debt.

Based on Friday's closing prices in New York, the deal is worth about $41.66 per Alberta Energy share, a 13% premium. Alberta stock, which closed Friday at $36.99, rose nearly 7% last week after speculation about the merger surfaced. Both companies acknowledged they were in merger talks Friday after the Toronto Stock Exchange formally requested a response to the speculation. The stocks trade on both the Toronto and New York stock exchanges. ...