SandRidge Trading Spikes on Acquisition
OKLAHOMA City, OK (
) -- Trading in shares of
SandRidge Energy
(SD) - Get Report
was unusually high on Monday morning, after the energy company announced an acquisition of
Arena Resources
(ARD) - Get Report
.
There were more than 25 million SandRidge shares traded before midday on Monday, versus an average daily volume for SandRidge of less than 8 million shares.
SandRidge shares were down 5%, or 37 cents, to $7.48 shortly before midday.
Arena Resources shares were up more than 7%, or $2.45, to $36.73. More than 7 million shares of Arena were traded on Monday morning, versus an average daily volume just above 1 million shares.
SandRidge was paying Arena shareholders stock and cash equal to $40 per Arena Resources share, a 17% premium. To finance the merger, SandRidge plans to issue close to 4.8 million shares of common stock, and pay $2.50 in cash for each Arena Resources share. The deal is expected to close in the second or third quarter.
UBS cut its SandRidge Energy estimates through 2011 on news of the merger, writing that the Arena Resources acquisition would cut into earnings.
SandRidge CEO Tom Ward said in the release announcing the acquisition that it would "be accretive to 2011 cash flow per share."
The acquisition of Arena Resources is in line with a previously announced strategy for natural gas player SandRidge to increase its oil production and reserves.
-- Reported by Eric Rosenbaum in New York.
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