Did Whiting Petroleum Corp Just Buy Kodiak Oil and Gas Corp on the Cheap?
The revelation that Whiting Petroleum Corp (NYSE: WLL ) only paid a 5% premium to average prices over the last 60 days to purchase the stock of fast-growing Bakken producer Kodiak Oil and Gas Corp (NYSE: KOG ) was clearly unusual. Typically, a growing company doesn't accept a buyout without a substantial premium. In this case, the deal creates a formidable producer in the Bakken to rival Continental Resources (NYSE: CLR ) .
Is it possible that Kodiak shareholders benefited more from accepting a meager premium?
The deal Whiting Petroleum agreed to buy Kodiak Oil and Gas for .177 shares of WLL per KOG share, or the equivalent of $13.90 per share based on the July 11 closing price of Whiting. Though the deal offers a 5% premium above the average of price of Kodiak over the last 60 days, any investor in the stock might be disappointed that it accepted an offer below the prior closing price. The stock, though, is rebounding 5% as of this writing, suggesting that maybe accepting an offering around current market prices does allow shareholders to participate in the potential upside of the new entity.
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