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Warburg Pincus affiliate to snap up Roan Resources in $1B deal

Warburg Pincus LLC affiliate Citizen Energy Operating LLC agreed to acquire Anadarko Basin-focused Roan Resources Inc. in an all-cash deal valued at about $1.0 billion, including the assumption of the oil and gas company's funded net debt of roughly $780 million.

Under the deal, Roan shareholders will get $1.52 in cash for each Roan common share held, according to an Oct. 1 news release. The deal amount represents a premium of about 24% over the closing price of Roan shares as of Sept. 30.

"This transaction is the culmination of our board's extensive review of strategic alternatives to maximize value for our stockholders, including a comprehensive process during which we engaged with a considerable number of counterparties," Roan Executive Chairman Joseph Mills said in the release. He added that an all-cash deal is "in the best interests" of the company's investors.

Subject to approval from Roan shareholders, the transaction is scheduled to close in the fourth quarter of 2019 or the first quarter of 2020.

In conjunction with the deal, Roan named Rick Gideon CEO, effective immediately. Gideon recently was senior vice president of U.S. operations at fellow oil and gas producer Devon Energy Corp. To give Gideon time to evaluate Roan's overall operations, the company said it will temporarily cut its drilling and development activity and suspend all completion activity.

Linn Energy Inc. spun off Riviera Resources Inc. and formed Roan in 2018 as part of an effort to separate its midstream and upstream businesses. Roan is focused on the development, exploration and acquisition of unconventional oil and natural gas reserves in the Merge, SCOOP and STACK plays of the Anadarko Basin in Oklahoma.

JPMorgan Chase Bank NA, BMO Harris Bank NA, The Toronto Dominion Bank New York Branch, and BofA Merrill Lynch will provide fully committed debt financing for the deal. Investment funds affiliated with Warburg Pincus and Citizen Energy will provide equity financing.

Citi and Jefferies LLC are financial advisers and Vinson & Elkins LLP is legal counsel to Roan. BofA Merrill Lynch is financial adviser and Latham & Watkins LLP is legal counsel to Citizen Energy.