Forestar reached deal to buy Credo for $146MAUSTIN, Texas (AP) — Forestar Group Inc., a real estate and natural resources developer, said Monday that it has agreed to buy Credo Petroleum Corp. for about $146 million in cash.
AUSTIN, Texas (AP) — Forestar Group Inc., a real estate and natural resources developer, said Monday that it has agreed to buy Credo Petroleum Corp. for about $146 million in cash.
Under the terms of the agreement approved by the boards of both companies, Forestar will pay $14.50 per share for the Denver-based oil and gas company. That is a 34 percent premium over the company's Friday closing stock price of $10.86.
Credo shares jumped $3.47, or 32 percent, to $14.33 in morning trading after rising as high as $14.38 earlier in the session, its highest level since March 2011.
Forestar said the acquisition is expected to more than double its existing oil and gas production and proven reserves. Once the deal closes, the company will have significant ownership and operations in several strategic oil and gas formations including North Dakota's Bakken and Three Forks formations
Credo, which also has operations in Kansas, Nebraska, the Texas panhandle and Oklahoma, said the offer takes into account the value that has been built into the company since it began transitioning to oil from natural gas four years ago.
The deal, which is not subject to Forestar shareholder approval or financing conditions, is expected to close in the second half of this year, Credo said.
Forestar shares fell 10 cents to $12.71 in morning trading. Its shares have traded in a 52-week range of $9.94 to $17.59.
Copyright 2012 The Associated Press.