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SandRidge adopts shareholder rights plan in connection with Bonanza Creek merger

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SandRidge adopts shareholder rights plan in connection with Bonanza Creek merger

SandRidge Energy Inc.'s board of directors adopted a short-term shareholder rights plan in connection with the proposed merger with Bonanza Creek Energy Inc.

The two entities struck a merger agreement in which SandRidge will acquire all of Bonanza Creek's outstanding common shares with a combination of cash and stock worth $746 million. The deal is expected to close in the first quarter of 2018, after which Bonanza Creek shareholders would own between 31.4% and 35.8% of SandRidge's outstanding shares, and a Bonanza Creek independent director would transfer to SandRidge's board.

Both oil and gas producers emerged from Chapter 11 bankruptcy recently, Sandridge in October 2016 and Bonanza Creek in April 2017.

The rights plan adopted by SandRidge's board is intended to protect its shareholders' right to vote on the proposal to approve the issuance of the company's common stock for the merger and is designed to prevent anyone from gaining control of SandRidge without appropriately compensating its shareholders, the company said in a Nov. 27 news release.

The rights plan would come into action if a person or group exceeds the 10% beneficial ownership threshold of SandRidge stock. Shareholders who currently have beneficial ownership of over 10% are exempt from consideration but may not acquire additional shares without triggering the rights plan.

The rights plan was not adopted in response to any specific takeover bid, SandRidge said.