By the OGJ Online Staff
HOUSTON, Oct. 5 -- Devon Energy Corp., Oklahoma City, and Mitchell Energy & Development Corp. in the Woodlands, said Friday their directors amended the merger agreement between the two companies to eliminate the risk that the recent decline in Devon's stock price might prevent tax benefits conditional to that transaction.
The amendment will have no effect on the economics of the proposed $3.1 billion deal, said company officials.
Under the original structure, Mitchell was to merge with a subsidiary of Devon in a transaction designed to be tax-free, except to the extent that Mitchell's shareholders receive cash (OGJ Online, Sept. 27, 2001).
The recent decline in Devon's stock price created doubt as to whether the tax benefit could be preserved for stockholders, officials said.
The amended agreement would complete the transaction as originally structured if the tax benefits are available. Otherwise, a new holding company will be created with Devon and Mitchell as subsidiaries
Under that plan, Devon's shareholders would exchange each of their shares for one share of the new holding company. Mitchell's shareholders would exchange each of their Mitchell shares for 0.585 of a share of the new holding company and $31 in cash.