For those of us that own both stocks, is this considered very good news and what are your expectations in terms of potential short and medium term returns?
Thank you and I'll wait your response.
Francesco
It is essentially a merger of equals: VRN shareholders will get 1.05 shares of WCP for each VRN share in the deal. The merged company will be called Whitecap, and run by WCP management, but with four VRN directors. The deal makes good sense. Cost savings will be $200M. It will be the largest light-oil producer in Canada, and significantly larger and stronger financially. Typically, larger companies are seen as safer and get better valuations. It is immediately accretive and dividends will be maintained. WCP will maintain its $0.73 dividend. This will represent an increase of 67% for VRN shareholders. Closing is expected by the end of May. The stocks of the two may not go up initially. The sector and the market are in a bit of a freefall these days. But corporately, it looks like the right move to us, and is structured well.