Arkla Inc. and Diversified Energies Inc. (DEI) have agreed to a merger of DEI into Arkla in a deal valued at about $630 million.
After the merger, the combined companies will have the third biggest U.S. gas distribution network in terms of customers and volume of about 500 bcf/year.
Under the definitive agreement reached last week, DEI shareholders will receive 1.575-1.752 shares of Arkla common stock for each share of DEI common. Based on recent closing prices, that would net DEI shareholders Arkla stock worth about $39/share of DEI stock. In addition, DEI will pay Arkla $3-6 million for reimbursement if the deal is not completed. Pending shareholder and regulatory approval, the deal is to be complete by yearend.
Arkla, of Little Rock, Ark., and Shreveport, La., has assets of almost $4 billion and a gas distribution network serving 2 million customers in an eight state area stretching from Houston to St. Louis.
Its pipeline system is the nation's sixth biggest, and its 82% owned Arkla Exploration Co. holds one of the top U.S. gas reserves portfolios.
DEI, Minneapolis, has assets totaling about $800 million and serves about 650,000 customers in an area extending from Nebraska to Minnesota. Its Dyco Petroleum Corp. unit in Tulsa has a sizable U.S. leasehold position.
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