When business deals are proposed and formed, parties on both sides of the deal have something to gain. When it comes to mergers and acquisition, specific planning should be conducted in order to ensure the proposed business goals will result. Detailed plans and properly-drafted paperwork will better serve this initiative, while also protecting the rights and interests of all parties involved.
A Denver-based oil company and a Houston-based oil company recently signed a definitive merger agreement. Forest Oil Corp. and Sabine Oil and Gas LLC claim that this merger would create one of the largest players in the Eagle Ford Shale area. Once the business deal is completed, Sabine will own 73.5 percent of the newly formed company while Forest will own 26.5 percent.
The completion of this merger is expected to occur in the third or fourth quarter of 2014. The two companies will act as subsidiaries under the newly formed Sabine Oil and Gas Corp. The merger is expected to generate optimal savings through operational synergies, optimized capital allocation and benefits of scale. Furthermore, most leadership roles in Sabine will remain in their positions.
Mergers and acquisitions can be very complex business deals and require much careful planning. Moreover, it is crucial to draft detailed paperwork. Parties involved in the transaction should ensure that these documents are legally enforceable, while also making sure that they understand the details contained in the documents. In these matters, it might be advisable to seek legal guidance. This will help protect parties' interests and rights in the business deal.
Source: Houston Business Journal, "Houston and Denver oil companies merge, create big Eagle Ford Shale player," Josh Cain, May 6, 2014