SandRidge Energy’s $746 Million Acquisition of Bonanza Creek Energy


Morgan Stanley & Co. LLC and Vinson & Elkins L.L.P. acted as financial and legal advisors, respectively, to SandRidge. Evercore and Kirkland & Ellis LLP acted as financial and legal advisors, respectively, to Bonanza Creek.

SandRidge Energy (NYSE: SD) and Bonanza Creek Energy (NYSE: BCEI) jointly announced today that the two companies have entered into a definitive merger agreement under which SandRidge will acquire all of the outstanding shares of common stock of Bonanza Creek in a cash-and-stock transaction valued at $36.00 per share. The consideration consists of $19.20 in cash and $16.80 of SandRidge shares for each Bonanza Creek share, subject to the collar mechanism described below.

Bonanza Creek shareholders will receive $36.00 per share under the terms of the agreement, comprised of $19.20 per share in cash and $16.80 per share in common shares of SandRidge stock, subject to the collar mechanism. This represents a 17.4% premium to Bonanza Creek’s closing price as of November 14.

This purchase price implies a total transaction value of approximately $746 million, comprised of $398 million in cash and 18.89 million shares of SandRidge stock, based on SandRidge’s stock price as of November 14.

Following the transaction, shareholders of Bonanza Creek are expected to own between approximately 31.4% and 35.8% of the outstanding shares of SandRidge based upon the Average Parent Stock Price (as defined below). One of the independent directors of Bonanza Creek will be joining the Board of Directors of SandRidge.

The stock portion will be subject to a collar based on the volume weighted average price of SandRidge common shares over the 20 business days ending on the third business day prior to closing (the “Average Parent Stock Price”). If the Average Parent Stock Price is greater than or equal to $17.50 but less than or equal to $21.38, Bonanza Creek shareholders will receive a number of SandRidge shares between 0.7858 and 0.9600 equal to $16.80 in value per Bonanza Creek share. Bonanza Creek shareholders will receive 0.9600 SandRidge common shares if the Average Parent Stock Price is below $17.50 and 0.7858 SandRidge common shares if the Average Parent Stock Price is above $21.38.

The Boards of Directors of both companies have unanimously approved the terms of the agreement, and have recommended that both shareholder groups approve the transaction. The completion of the transaction is subject to the approval of each company’s shareholders, certain regulatory approvals and customary closing conditions. The transaction is expected to close in the first quarter of 2018.

The V&E corporate team was led by partners Steve Gill (Picture) and Mark Kelly, with assistance from corporate associates Justin Hunter, Nettie Downs, Ryan Martin, Maggie Webber and Ryan Rivera. Also advising were tax partner John Lynch; executive compensation and benefits counsel Katherine Mull and associate Steven Oyler; environmental senior associate Matthew Dobbins; and finance senior associate Guy Gribov and associate Jason Blackmer.

The Kirkland team included partners Doug Bacon, Kim Hicks and Andrew Calder.

Involved fees earner: Stephen Gill – Vinson & Elkins LLP; Justin Hunter – Vinson & Elkins LLP; Nettie Downs – Vinson & Elkins LLP; Ryan Martin – Vinson & Elkins LLP; Mark Kelly – Vinson & Elkins LLP; Ryan Rivera – Vinson & Elkins LLP; John Edward Lynch – Vinson & Elkins LLP; Katherine Mull – Vinson & Elkins LLP; Steven Oyler – Vinson & Elkins LLP; Matthew Dobbins – Vinson & Elkins LLP; Guy Gribov – Vinson & Elkins LLP; Jason Blackmer – Vinson & Elkins LLP; Andrew Calder – Kirkland & Ellis; Doug Bacon – Kirkland & Ellis; Kim Hicks – Kirkland & Ellis;

Law Firms: Vinson & Elkins LLP; Kirkland & Ellis;

Clients: Bonanza Creek; SandRidge Energy, Inc.;

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Author: Ambrogio Visconti