By the OGJ Online Staff
HOUSTON, Mar. 13 -- Chesapeake Energy Corp. has proposed to acquire Canaan Energy Corp. for $12/share, which values the deal at about $55 million and is a 31% premium over Canaan's Mar. 11 closing price, Chesapeake said. Chesapeake also will also assume about $42 million of Canaan's debt. Both companies are based in Oklahoma City.
Chesapeake—which says "it would prefer to negotiate a mutually acceptable business combination" with Canaan—has taken its offer directly to Canaan's shareholders, because it has received numerous rejections of its offers for the firm.
"Canaan's small size, poor operating performance since becoming a public company, noncompetitive cost structure (including high general and administrative expenses), and limited access to capital make any internal growth plan virtually impossible to execute," wrote Aubrey K. McClendon, Chesapeake chairman and CEO, in a letter to Canaan shareholders.
Early last year, Chesapeake completed a $345 million acquisition of Tulsa-based Gothic Energy Corp. (OGJ Online, Jan. 17, 2001). Currently, it is among the 10 largest independent natural gas producers in the US.