Devon buys Mitchell in $3.5 billion deal

Devon Energy Corporation became the second largest independent natural gas producer in the United States today after announcing that it will acquire the Mitchell Energy & Development Corporation for $3.5 billion.

Devon Energy Corporation and Mitchell Energy & Development Corporation announced today that Devon will acquire Mitchell for cash and stock in a deal valued at $3.5 billion.

With the acquisition, Devon will become the second largest independent natural gas producer in the United States.

Under the terms of the agreement, Mitchell’s shareholders would receive, for each Mitchell common share, $31 cash and 0.585 of a share of Devon common stock.

This requires Devon to pay $1.6 billion and issue 30.2 million shares to Mitchell’s shareholders.

Based upon Devon’s closing stock price of $50.26 on August 13, 2001, the total value of the cash to be paid and stock to be issued to Mitchell shareholders would be approximately $3.1 billion.

Devon would also assume approximately $400 million of debt and other obligations of Mitchell.

Devon and Mitchell combined produced approximately 1.4 billion cubic feet of natural gas per day in the US in the second quarter of 2001, making Devon the second largest independent gas producer in the US

Devon expects to achieve annual operating and overhead synergies of at least $20 million.