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Petrohawk Energy (HAWK) agreed to buy oil and gas company KCS Energy( KCS) for roughly $1.6 billion in cash and stock.

For each KCS share, Petrohawk will pay $9 in cash and 1.65 of its own shares. Those terms value KCS at $31.41 a share, a premium of more than 9% to its last closing price. Following the transaction, KCS stockholders will own roughly 50% of the combined company.

Shares of KCS have traded between $12.90 and $29.37 in the last year. In premarket trading, KCS was higher by $1.84, or 6.4%, to $30.50. Petrohawk was down 33 cents, or 2.4%, to $13.25.

The combined company will be known as Petrohawk Energy and will be based in Houston. On a pro forma basis, the merged company will have estimated proved reserves of about 1 trillion cubic feet of natural gas equivalents.

Petrohawk's Chairman, President and CEO Floyd Wilson will keep those titles. KCS Chairman and CEO James Christmas will serve as vice chairman. KCS Chief Operating Officer William Hahne will maintain that post with the new company.

The board will have nine directors, five of whom will be nominated by Petrohawk and the other four by KCS. The companies expect to complete the transaction during the third quarter.